Tea Leaf Nation
China’s New, Cool Thing: Getting Priced Out of the Housing Market
That's state media's spin, and it's backfiring badly.
One called it brainwashing; another called it shameless. On Dec. 29, the Chinese Communist Party’s mouthpiece paper, the People’s Daily, ran an opinion piece lauding young people uninterested in purchasing real estate, calling their mindset “progressive.” The article said that not being shackled to big-city apartments, and the mortgages required to pay for them, could help broaden the horizons of China’s youth and allow them to be more open to the rest of the country and the world. The article seemed to be a stab at finding a silver lining to the results of a recent survey showing that young Chinese born since 1990 are far less interested in purchasing property than their older counterparts. With real estate sales and prices falling across much of China, the paper appeared determined to find an upside to this potentially dispiriting data. But instead of being cheered by the Daily take, many perceived callousness toward the frustrations of many young Chinese who feel that buying a home is a required — but practically unachievable — marker of success.
On Weibo, China’s massive microblogging platform, many argued that young people today shy away from property not because they are particularly open-minded, but because they are insufficiently wealthy. “It’s not thinking progressively; it’s that pockets are empty,” wrote one Beijing woman. The well-known Beijing lawyer Tian Canjun was more cutting. He wrote on Weibo that the idea of a progressive, property-free youth was a government innovation aimed at calming public anger over unaffordable housing. He said the Daily article was “a kind of brainwashing.” Tian wrote, “This is like saying that students who can’t graduate because they can’t afford tuition, and that sick people waiting at home to die because they can’t afford medical care, are progressive thinkers too.” There were so many posts like this that Southern Metropolis Weekly in south China’s Guangdong province posted a roundup of reactions on Dec. 30, many boiling down to the same thing. The finance channel of Hong Kong broadcaster Phoenix Television posted the article to its Weibo account, adding that the effort to “make something grand out of people not being able to afford housing” was “shameless.”
Putting controversy about the spin aside, the survey’s findings do signal a potentially dramatic shift in the Chinese way of thinking. According to the New York Times, about nine-tenths of Chinese families currently own their homes, while in the United States only about two-thirds of families do. Part of this data reflects the fact that in previous generations, young Chinese even of very modest means dreamed of having a home and settling in their early 20s. For many Chinese today, buying a home continues to represent a crucial first step to finding a mate and settling down. Home ownership is so fundamental to Chinese security that there is a popular term, fangnu, meaning “house slave,” for those locked into jobs they may not like in order to meet their mortgage payments.
For the past several years, that sacrifice may have been tolerable as home prices skyrocketed, turning tidy profits for those same “slaves.” Over the last year, however, the market has begun to cool dramatically with the slowing of China’s overall economy. Home sales in the first 11 months of 2014 fell by 9.7 percent compared with the same period a year earlier, according to the National Bureau of Statistics. While many cities in China keen to cool an overheated market had begun to restrict home purchases to two per family, those limits are now being lifted in a bid to goose home sales. Only five cities remain with the buying caps still in place: the megacities of Beijing, Shanghai, Guangzhou, and Shenzhen, and the moneyed resort town of Sanya. In September 2014, China’s central bank also loosened mortgage rules for the first time since the 2008 global financial crisis in a bid to spur flagging property sales.
That leaves Chinese homes as potentially depreciating assets, but also very expensive ones. That may explain why the survey that sparked the Daily hullabaloo showed that young people were not interested in property. The Chinese Academy of Social Sciences, a government think tank, wrote in a December 2014 research paper that only 55 percent of 4,110 survey respondents born in the 1990s planned to buy an apartment. The state-run Global Times quoted the report’s lead researcher, Tian Feng, as saying that the post-’90s generation attached “more importance on quality of life” and that some had “abandoned the idea of buying a home because it would sacrifice their quality of life.”
Of course, Tian also said that the main obstacle keeping youth from buying is sticker shock. The Global Times noted that Beijing’s average housing price was $217 per square foot in December 2014, while the average salary for university graduates was only $523 per month. The paper added that China’s post-’90s generation is still young, so it may be premature to be asking that generation about housing purchases. Since most are only children due to China’s one-child policy, some are likely to inherit property or get help from their parents if they do decide to buy. Chinese are also marrying later, meaning that home ownership in preparation for marriage is also likely being postponed. The trend, in other words, is real. Just don’t call it “progressive.”
Photo by Getty Images
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