Spatial segregation and social exclusion, caused by rapidly growing global population pressures and the wealth gap, are driving unprecedented changes in social systems [1]. Socioeconomic status inequities are growing both within and among societies ^[2][3][2,3] and have become an indisputable reality in human settlements, especially in cities [4]. The rate of new housing construction has lagged far behind population growth in urban centres, and the gap between high housing prices and low affordability has led to growing migration to the outskirts of many burgeoning cities [5]. Housing costs have a significant impact on access to adequate and affordable housing, particularly for vulnerable groups [6]. In the context of the Sustainable Development Goals, the provision of equitable housing and infrastructure in settlements is fundamental to social equity [7]. Therefore, a redirection towards sustainability and well-being, which achieves the progressive realisation of the right to adequate housing, has been regarded as the most viable option for further development.

The spatial distribution, supply and demand of urban public service facilities are vital factors that affect the residents’ well-being ^[8][9][10][8,9,10]. Public services, as non-competitive public goods provided by the government, could bring economic benefits. When such economic benefits persist, they will enter asset prices and be influenced by the real estate market. This capitalisation effect represents a significant increase in the value of nearby housing as a result of investment in public services. Public services, such as cultural services, healthcare, eldercare and public transportation, could serve as catalysts to stimulate surrounding real estate development [11]. Public service facilities of superior quality in urban centres could stimulate residents’ willingness to buy houses and form a cluster of advantaged groups, thus attracting more public investment and providing better services [12]. However, imbalanced urbanisation and fragmented local government structures may cause concentralised patterns and spatial differences in public service provision ^[13][14][13,14]. These are capitalised to varying degrees, and thus affect housing price elasticities [15]. In addition, as residents are willing to pay more for better access to high-quality public services, space for high housing prices is likely to cluster together, and this distribution may offset the expected incentive effects of some policies ^[16][17][16,17]. For example, the simplistic educational policies pursuing equity, such as ‘nearby enrolment’ and ‘zero school choice’ policies [18], cannot achieve true equity, but rather reinforce the school district effect and aggravate inequities in neighbourhoods and educational opportunities [3]. In general, the spatial effect of accessibility to public service facilities on housing prices is not yet recognised.

In addition, the causes of urban housing inequity could be explained by the dual mechanisms of the emerging housing market and the persisting socialist institution ^[19][20][19,20] (Figure 1). Prior to the economic reform and opening-up in 1978, China’s urban housing system was a welfare system that relied on unified national construction and low rent distribution ^[21][22][21,22]. This system had a strong constraint on urban spatial layout and social differentiation. After the economic reform and opening-up, China’s urban housing reform transformed access to housing from a socialist administrative allocation system to a more market-oriented housing development and consumption system ^[20][23][20,23]. The abolition of welfare housing policy provision in 1998 was a paramount milestone in Chinese urban housing reform, which shaped a market-oriented urban housing provision system [24]. Since then, the goal of housing commercialisation has provided Chinese urban households with the opportunity to choose their suitable houses and living environments [19]. Individuals with higher political status, better socioeconomic conditions and the possession of organisational resources and power were more likely to have access to superior living conditions ^[25][26][25,26]. The combined action of power and the market accelerates the division of urban housing space and gives way to the stratification process of housing space [27]. Accordingly, this historical process not only reveals China’s economic transformation and massive urbanisation process, but also affects residents’ well-being.