‘Housing affordability’ has been widely used as the key criteria to examine the ability of households to afford the housing expenditures. However, much less attention has been paid to the housing affordability issues that faced by Chinese households. This paper examines factors which would impact housing affordability, by linking the theoretical understandings in the macroeconomic environment, housing market and liquidity constraints. Quarterly time series data at the national level are employed for empirical investigation. The instrumental variable approach is employed to resolve the endogeneity issues and obtain the consistent estimators. Suggestions of taking measures to mitigating housing affordability difficulties would be discussed according to the empirical findings.