China's ownership 'miracle': From investment games to a social right

While global housing markets grapple with unaffordable prices, China is pursuing a unique self-regulatory path. National statistics show housing prices in China have declined for 37 consecutive months. In June, prices for new homes in 70 selected cities dropped by 0.15%, while prices for existing homes saw a more significant decrease of 0.32%.

This ongoing price slide, which began in 2021 with the collapse of developers like Evergrande, masks a remarkable social paradox: 90% of China's population now owns at least one home. This figure is particularly striking among the younger generation, with 70% of Chinese citizens under 35 residing in owner-occupied housing. This achievement is significant for a country with such a vast population and is largely attributed to clear policy directives from Beijing.

President Xi Jinping's stance that "houses are for living in, not for speculation" has translated into stringent state intervention. The government has focused on increasing housing supply, easing mortgage access for first-time buyers, and erecting barriers against investors treating property solely as a financial asset. China's strategy combines incentives with strict regulations.

For first-time homebuyers, the central bank has eliminated minimum interest rates and lowered down payments to a historic low of 15%. Local governments have been empowered to purchase completed but unsold apartments from developers facing bankruptcy. Through a special 500 billion yuan financing line, these properties are being converted into affordable social housing and protected rental programs, absorbing the substantial inventory accumulated in previous years. Conversely, acquiring multiple properties has become significantly more difficult. Down payments for a second home are 25%, and for a third home or more, banks require up to 75% upfront, along with higher interest rates and increased VAT. Foreign investors face even stricter rules, being explicitly prohibited from buying property for rental purposes and requiring at least one year of legal residency or employment in China.

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Houses are for living in, not for speculation.