China’s housing market woes continue, with recent data showing tumbling residential sales among developers and a decline in housing prices across 70 large and medium-sized cities. Adding to the complexity are concerns about defaults by indebted property developers, stalled residential construction projects, and the potential spread of weakness in the real estate sector to financial trust companies. Since 2020, companies responsible for about 40% of Chinese home sales have defaulted.
With a rise in financial uncertainty and a drop in consumer confidence, many home seekers in China are reluctant to buy in the near term, choosing instead to rent and conserve their savings. Chinese consumers are spending less in general, and once-plentiful jobs fueled by the real-estate booms of the past are now disappearing.
The government has proposed a number of measures to stimulate housing demand, including reducing required down payments for first-time homebuyers and easing purchase restrictions for buyers of second homes. Many fear that such measures are inadequate, given the glut of inventory in the housing market and long-term demographic trends pointing to fewer births and a shrinking population.
A recent Sanlian Lifeweek feature on the Chinese housing market (“Housing prices in 70 cities are tumbling. Why is it so hard to rescue the real estate market this time around?”) has spurred a great deal of discussion online. The article delves into demographic and other trends, and contrasts recent ineffective efforts to “rescue” the housing market with more successful real-estate bailouts in 2008 and 2014, respectively.
CDT editors have compiled and translated a selection of WeChat responses to the Sanlian Lifeweek feature, in which respondents discuss topics such as job insecurity, lack of consumer confidence, fear of falling house prices, and how demographic changes will shape their future:
红旗下的蛋：When the chives are being cut down faster than they can grow, the chives are in no position to help out, even if they want to.
一脸旺财相：Ordinary folks think the government still has a trick up its sleeve, while the government thinks ordinary folks still have money to spare.
哎哟喂：It’s not just about lack of money. There are too many stalled or unfinished housing projects. Even people who have the cash or can get a loan are wary of buying.
CryingSuns：It’s tough to even find a job. Who can afford to buy a house?
wyy：The key is that expectations have changed. If you can’t expect a stable future income, and you can’t expect that your house will be completed on schedule, it’s unreasonable to expect that allowing people to buy a few more houses [i.e. loosening purchase restrictions] will do anything to stabilize falling real estate prices.
余晖：Housing won’t collapse so easily, but at some point, population growth will. With fewer births, what will happen to all that extra housing?
雨雪霏霏：It’s a shame that those who haven’t been able to afford to buy still can’t afford it. There are a lot of people paying high rents for shared housing in the big first-tier cities, or who are living in urban villages, distant suburbs, or basement apartments. It’s not that they don’t want to buy a place of their own, just that they’ve given up because they can’t afford it.
酒：It’s not that it [the real estate market] can’t be rescued, it’s that there’s a glut of housing and no one’s buying.
居无竹：You work hard for decades, save up a few million to buy a house, and you’re afraid it’ll depreciate into a worthless pile of concrete that you can’t even sell, not to mention the sky-high maintenance fees you have to pay. Is that any way to live?
赵wq：Our pockets are empty and even though we want to buy things, we have to keep downgrading our consumption. Those discount shopping centers that seemed like they were on the verge of bankruptcy before the pandemic are thriving now.
绚彩飞舞：It won’t be long before they do away with purchase restrictions entirely.
木子月：Will real estate prices rise if purchase restrictions are abolished? Wrong. Scrapping purchase restrictions will cause prices to plummet even more, as people dump real estate holdings and replace them with properties in more desirable central locations. [Chinese]