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At a recent event, Chinese Vice Premier He Lifeng has urged for the implementation of stringent control measures on the management of affordable housing in the country. He proposed a ban on trading such housing properties, aiming to ensure a stable and sustained availability of low-cost homes. Beijing has been actively working to address the issue of high housing costs in major cities, which has made it difficult for many young people to purchase homes.
A representative from the Ministry of Housing and Urban-Rural Development stated in the previous year that China planned to introduce 6.5 million additional affordable rental units in 40 major cities between 2021 and 2025. However, the situation has intensified due to a weakening economy impacting job opportunities and incomes, making it increasingly difficult for the average person to afford buying a home. Furthermore, the availability of low-cost housing has diminished because these homes are being sold on resale markets after a few years, eroding their supply.
Vice Premier He, speaking at a conference in Beijing, emphasized that the development and building of affordable housing serve the dual purpose of easing housing challenges in major cities and stimulating investment and consumption. He characterized the construction of affordable housing as a “challenging and intricate” systematic endeavour and stressed the importance of rigorous management and cost management while also maintaining a reasonable construction pace, as reported by Xinhua. Additionally, he emphasized the importance of implementing an equitable and impartial allocation system to ensure that affordable housing is distributed to various groups, including low-income workers, at a minimal profit.
Buyers who possess the financial resources to return to the real estate market are struggling to resist the temptation of purchasing second-hand apartments at deeply discounted rates in these smaller cities. For example, Hu managed to acquire one of his apartments in Hebi for an exceptionally low cost of 1,000 yuan (approximately 11,500), before factoring in taxes and fees.
As per Anjuke, a major real estate platform in China, prices in certain parts of the city have declined by 27% since reaching their highest point in 2021.
The transactions take place amidst a growing set of difficulties for China’s real estate sector. Recent data shows a deceleration in the rise of new home prices in May, coupled with a substantial decrease in property investment, marking its most significant decline in more than 20 years.
According to reports, real estate agents in China have observed that a significant portion of buyers in these smaller cities do not originate from the local population. This group comprises speculators who don’t plan to live in the apartments they purchase, along with individuals seeking affordable retirement prospects or a budget-friendly place to reside.
Even though there is increasing attention on affordable apartments in smaller Chinese cities, experts exercise caution in forming overly positive assessments. Broader economic indicators indicate that China’s rebound from the COVID-19 pandemic continues to face difficulties. Issues such as diminished consumer confidence, limited domestic demand, and elevated rates of youth unemployment give rise to worries regarding future income stability and contribute to an overall lack of confidence in the market.
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