In recent years, China’s real estate market has experienced rapid growth, with related industries revolving around market trends. The market value of real estate has risen repeatedly, followed by a continuous surge in housing prices. While some rejoice and others grieve, the former are, after all, in the minority. Those who made a fortune early on in the real estate market experienced its most prosperous period—a trend that extended even to downstream sectors such as home appliances and home renovation. However, those who grieve share a common plight: the vast majority of people in China still cannot afford to buy a home.
Household Debt-to-Income Ratio
The overall household leverage ratio reflects the general debt situation of ordinary people. In other words, as the household leverage ratio increases, people’s debt levels are also gradually rising. According to relevant statistical analyses, it took nearly 10 years for the household housing leverage ratio to rise from 10% to 20%, whereas the ratio rose from below 20% to 30% took only four short years—from 2015 to 2018. By 2019, the household housing leverage ratio had risen to 34%. Today, China’s household leverage ratio exceeds that of the United States and Japan and is on par with France’s. This clearly shows that Chinese citizens face significant pressure when purchasing homes, as they must shoulder heavy mortgage burdens—some of which take decades to pay off.
“Old-Neighborhood Renovation” Program Accelerates
Chinese people face enormous financial pressure in order to buy a home, and for families living in older residential complexes, it is extremely difficult to move into a new home. Their old homes are virtually unsellable, while the prices of new homes are simply too high. As a result, over the past two years, demolition has become a shared aspiration among residents of these older complexes.
However, starting this year, their hopes of becoming “residents affected by demolition” may be dashed. This is because the government has ordered “urban renewal” and has invested substantial funds in the renovation of old residential communities and the construction of surrounding infrastructure. According to reports, the total area of dilapidated residential communities scheduled for renovation in 2020 is approximately 3 billion square meters.
Advancing the Development of a Single National Network
In other words, the government’s regulation of the real estate market is proceeding smoothly, making it very difficult for prices to skyrocket. Another important point worth noting is that, according to a notice issued by the Ministry of Housing and Urban-Rural Development on April 13, the initiative to “advance the construction of a unified national real estate database” stands out. Specifically, this requires that municipal and county housing and urban-rural development departments establish and maintain, in accordance with regulations, comprehensive property inventories covering all new and existing commercial housing units within their respective administrative jurisdictions. In other words, the real estate market will soon have a unified, standardized property database. This means that data on China’s real estate market will become more systematic and accessible.
“Property Tax” Is Expected to Be Implemented
Since every household is clearly recorded in the “system,” this means there is hope for the implementation of the property tax. Essentially, there has been talk of a property tax every year for many years, but it has never been implemented—mainly because the management system may not have been sufficiently refined. Many people have resorted to tactics such as fake divorces to circumvent property regulations, but once managed through a centralized system, property status will be immediately transparent. The initiative to “advance the construction of a nationwide integrated network” has made the implementation of the property tax a reality.
In fact, it’s not just property management that is being implemented in an orderly manner; measures to protect the rights and interests of migrant workers are also being implemented in an orderly fashion through procedures such as the real-name registration system. It can be said that the era of big data has indeed made many things that were once impossible now possible.
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