With the change in political and economic situations, increased urbanization and the growing population in China leads to extended housing needs, which results in various problems for the real estate market, such as the pronounced rise of housing price and unreasonable housing supply system. At present, the major issue that the government is facing with is how to improve the housing availability and provide space to the urban residents to solve the problem that many urban residents are unable to afford housing. In order to fully understand the housing market in Beijing city, this paper adopted quantitative methods of Housing Price to Income Ratio, Residual Income, and the Housing Affordability Index to examine the housing affordability of Beijing urban residents from 2004 to 2013, based upon the data collected from Beijing Statistic Yearbook mostly. The analysis revealed that there is a declining trend of housing affordability in Beijing and the gap between residential housing prices and urban households’ incomes and the difference between the poor and the rich is obvious.

Housing affordability is the relationship between households’ income and housing expenditure. The public are very concerned about the high price of residential housing in Beijing, which is considered go beyond the income of average citizens. In order to fully understand the China’s real estate market, the paper first analyses the land policy, housing reform and housing finance, etc. Then this paper examine to what the extent the high housing price had led to low levels of housing affordability from 2000 until 2009 among Beijing urban households. The ratio analysis has been conducted to measure housing affordability. Meanwhile, we compute the housing-induced poverty, find maximum affordable housing prices for all the income classes, and suggest the housing assistance that should be provided to urban households in Beijing. Approximately, only 20% Beijing urban residents have purchase affordability for a standardized new residential housing, no matter which approach is used, strong statistical evidences reveal that there is an incessant large gap between residential housing prices and urban residents’ incomes in Beijing.