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From Geography to Housing Prices

Thought Real_Estate
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Note

This article was originally written on March 5, 2021, and published on Sina Weibo. As the platform has since become inaccessible, it is now republished on this personal blog.

Introduction

Some time ago, I read an article discussing the relationship between housing prices and M2, which led me to revisit my thinking on geography and housing prices. For a long time, my personal benchmark for evaluating whether housing prices in a region are “reasonable” was simple: compare them to the average monthly salary in that area. If the monthly salary roughly equals the price per square meter, then the housing price feels acceptable.

Looking back, this is clearly a black-box conclusion. I’ve been continuously thinking about the underlying factors, and in this piece, I want to outline my current thoughts from five perspectives.

What Does Housing Price Actually Contain?

In my view, housing prices consist of two parts:

  1. The intrinsic cost of the property itself
    This includes land acquisition, construction costs, and all tangible expenses required to build the structure.

  2. The value of the resources attached to the property
    This is the part I want to focus on: what exactly are you paying for beyond the building itself?

The Price of Access to Resources

To understand this, we need to talk about the household registration system (hukou).

Historically, as early as the Western Zhou Dynasty, there were officials responsible for managing population records. Back then, the system was closely tied to land ownership. Land was the primary resource: if you had land, you could survive.

Generations invested labor to transform raw land into fertile farmland. Naturally, mechanisms were needed to protect that investment. Hukou emerged as a way to bind people to resources.

Even today, this logic persists. Agricultural households still retain land rights. This also explains why many people hesitate to move to cities—generational investment becomes sunk cost.

From this perspective:

  • Land is a resource

  • Hukou is a system that binds people to resources

  • Therefore, hukou itself carries embedded resource value

In modern society, resources are no longer just physical assets like land and water. They are increasingly priced through access rights.

Examples include:

  • Education

  • Healthcare

  • Transportation

  • Living environment

  • Commercial infrastructure

School district housing, difficulty in booking medical appointments, regional restrictions in insurance—these are all manifestations of resource pricing.

A significant portion of housing price is essentially the cost of accessing these resources.

Housing Price Comparison Over the Past 10 Years

Rather than using statistical data, I prefer intuitive recall.

Take Shihezi as an example:

  • Around 20 years ago, housing was roughly 1,000 RMB/m²

  • Monthly salary was also around 1,000 RMB

At the time, I even imagined that earning 1,000 RMB per month would be a comfortable life.

Fast forward:

  • Salaries increased (e.g., 10,000 RMB/month)

  • Housing prices increased accordingly (e.g., 10,000 RMB/m²)

From a ratio perspective, the burden remains similar.

This is why I compare housing price to salary: it directly answers how long one must work to afford a home.

What changed is not just inflation, but the pricing of resources.

In earlier decades:

  • Education and healthcare differences were less pronounced

  • Resource value was less differentiated

Today:

  • Resource distribution is highly uneven

  • Resource pricing is embedded into housing

Thus, housing feels expensive not necessarily because of the structure itself, but because it includes bundled access to scarce resources.

The Impact of Geography on Resource Distribution

Resource development—especially in education, healthcare, and living conditions—is deeply influenced by geography.

Why not build top schools in deserts?
Why not place hospitals in barren regions?

This leads to the concept of geography (geopolitics/geoeconomics).

I categorize geographic influence into two types:

  1. Natural geography

  2. Policy-driven geography

And both must be analyzed with time horizon (durability) in mind.

Natural Geography

This includes:

  • Climate

  • Terrain

  • Water access

  • Agricultural viability

  • Transportation feasibility

These factors are fundamentally stable over time.

Example: Chongqing vs. Chengdu

  • Chongqing has strong river transport (Yangtze + Jialing Rivers)

  • Water logistics historically provided major advantages

Before modern infrastructure, rivers defined mobility and trade.

Policy Geography

This includes:

  • Special economic zones

  • Development zones

  • Tax incentives

  • Administrative decisions

These are human-imposed and can shift over time.

Time Horizon Comparison

  • Natural geography → long-term dominant

  • Policy geography → shorter-term adjustments

Even policy decisions ultimately must respect natural constraints.

Looking ahead, technological advancement will likely reshape resource distribution:

  • Centralized production (e.g., agriculture, manufacturing)

  • Artificial environments (controlled agriculture, biotech systems)

  • Increased efficiency via automation and AI

Example: The Netherlands

  • Small land area, harsh climate

  • Yet highly productive agriculture through technology

This suggests:

  • Resource production will become increasingly decoupled from natural limitations

  • But living environments will still favor naturally suitable regions

Future cities may trend toward:

  • Centralization

  • Regional specialization

  • Functional zoning

People will prefer to live in:

  • Climate-friendly areas

  • High-connectivity regions

Final Thought

Before teleportation technology exists, consider this:

Which regions will develop faster—those with free shipping (“包邮”) or those without?

If the answer is obvious, then the real question is:

What decisions should you make today based on that understanding?