Blitz Bureau
NEW DELHI: FOR the past three decades, China has been a nation of homeowners — supercharging the world’s second-largest economy and fulfilling the dreams of millions.
Since the decline and eventual end of a welfare housing policy in the 1990s, Government planning has coalesced with deep-seated cultural norms to create a level of private ownership unfathomable in the West. But a slowing economy and crisis-battered housing market could upend that.
Last year, new home sales dipped to their lowest value since 2014, according to official statistics, totaling only 7.3 trillion yuan ($1.06 trillion), versus 16.2 trillion yuan ($2.3 trillion) in 2021, at the height of the boom.
By volume, new home sales dropped by 8.7 per cent last year, economists from the Macquarie financial group wrote in January, noting that there was “no end in sight” for the downward trend. Many prospective buyers are now wary of taking on a mortgage. Among them is Cai Youcheng, a 36-year-old graphic designer in Beijing. “For me personally, renting actually makes more sense.” That feeling is common in the country of 1.4 billion, where home ownership means much more than just a deed of sale.
In the 1980s China’s communist government launched an era of breakneck economic liberalization. Reliance on employer-assigned housing was reduced, and private ownership strongly incentivized. The push accelerated in the 1990s with heavy subsidies.
“A lot of people, overnight, became homeowners at a very cheap price,” said Huang Youqin, professor of geography and planning at University at Albany. “That converted a lot of people who used to be renters, into homeowners.”
All of this contributed to China having one of the highest home ownership rates in the world: nine in 10 households own their home, multiple surveys reported.
Over much of the past two decades in China, units that easily go beyond 1,000 square feet in the towering apartment blocks of exclusive districts sold out fast. But for China’s property market, like all property markets, the good times couldn’t last forever.
During the boom, many developers amassed huge debts, and the oversupply of housing led to whole ghost districts and empty projects in many places. Badly run local governments, keen to massage numbers as well as find avenues for the huge oversupply of concrete and steel, compounded the problem.
As a result, the central government took drastic steps in 2020 to rein in a freewheeling property sector that once accounted for 30 per cent of the country’s economic activity.
Prices in freefall
The move began curbing problematic construction, but it also dealt a huge blow to homeowners, who watched property prices freefall. Five years since the initial wave of defaults by property developers, the sector remains scarred. New home prices extended their decline in March nationwide.
Developers in distress
D EBT-laden property behemoth Evergrande, once China’s biggest developer, was ordered to wind up by a Hong Kong court in 2024. Other major property developers also showed signs of distress, including Country Garden, which recently fended off a wind-up petition, and Vanke, which is awaiting an $11.6 billion rescue package from a local government.
“People have realized the market can go through periods of turbulence, which has made them much more cautious about investmentdriven purchases,” said Zhang, from Cushman & Wakefield.
The Chinese leadership has put stabilizing the housing market on its agenda, but analysts say that the central government – preoccupied by pushing tech advances – is not interested in seeing the sector return to its former prominence as an economic driver.
Zhang Xiaoduan, head of business development services for south and central China at real estate firm Cushman & Wakefield, noted a detachment between what authorities are wishing for and the reality on the ground.
