In China, nearly every real estate sales office faces a starkly quiet scene each day. (People News/AI-generated image)
[People News] The persistent downturn in China's housing market has led to significant asset devaluation and a ripple effect, severely impacting local finances, curbing consumer spending, and intensifying financial and employment crises, which have become central issues hindering overall economic growth. To address this situation, on August 7, various departments in Beijing jointly announced a new policy aimed at significantly lowering the barriers to home purchases and expanding the use of the housing provident fund, in an effort to revitalize the real estate market. However, both netizens and experts in China believe that the current real estate challenges are not merely about the 'height of the barriers,' but rather about the 'collapse of asset price expectations' and the 'limits of residents' debt capacity.' This initiative from Beijing fails to tackle the fundamental issues on the demand side, and such 'toothpaste squeezing' policies are not expected to yield positive results.
Lowering Home Buying Barriers and Expanding Housing Provident Fund Usage
On the evening of August 7, the Beijing Municipal Commission of Housing and Urban-Rural Development, the Beijing Municipal Planning and Natural Resources Commission, and the Beijing Housing Provident Fund Management Center jointly issued a notice titled 'Regarding Further Optimizing and Adjusting the City's Real Estate Policies,' which is set to take effect the following day (August 8).
The new policy indicates that for families not registered in Beijing, the required duration for social security or individual income tax payments to purchase commercial housing citywide has been standardized to '1 year' (down from the previous requirement of 2 years), while the limit on the number of commercial housing units that can be purchased remains unchanged. Specifically, non-Beijing registered families that have paid social security or individual income tax for 1 year can buy 1 unit of commercial housing within the Fifth Ring Road, and families with multiple children can purchase an additional unit; outside the Fifth Ring Road, there are no limits on the number of units that can be bought.
Parents who wish to gift commercial housing owned by the family to their adult children will no longer need to verify home purchase qualifications. Residents can directly apply for property transfer registration with the necessary documents.
Additionally, the maximum loan amount for housing provident funds has been revised.
For families purchasing a home where one member is a contributor to the provident fund, the maximum loan amount for the first home is set at 1.2 million yuan (RMB, the same applies below), while the maximum for the second home is 1 million yuan. If both spouses are contributors, the maximum loan amount for the first home increases to 2.4 million yuan, and for the second home, it is 2 million yuan.
Moreover, families in Beijing with no property or only one unit can utilize the provident fund for subsequent home purchases; those who have settled their provident fund loans can reapply; new provisions for withdrawing provident funds for renovations have also been introduced.
This 'toothpaste-style rescue' addresses immediate issues without tackling the underlying problems.
The financial and economic sectors widely agree that 'lowering the threshold' does not mean 'reducing the burden.' By lowering the down payment ratio and expanding the use of public funds, ordinary people are essentially allowed to take on higher long-term debt with less initial capital. In the context of slowing income growth and persistently high unemployment risks, this approach fails to address the core issue of the public feeling that they 'cannot afford to buy or are afraid to take out loans.'
Looking at the market rescue experiences from various regions over the past year or two, it is evident that whenever a new policy is introduced, there may be a brief uptick in the number of viewings or transactions of second-hand homes for a few days, but this quickly settles back to normal. The market has become immune to the official easing measures.
Expert: No resolution to the fundamental issues on the demand side
Chinese issues expert Li Tingqian stated to The Epoch Times, 'At the end of last year, Beijing changed the deadline for non-Beijing residents to pay social security/income tax from 3 years to 2 years, and today they are hastily introducing a new policy to reduce this period from 2 years to 1 year. Within the Fifth Ring Road, the purchase limit remains at one commercial housing unit, while outside the Fifth Ring Road, there are no restrictions on purchases.'
He further analyzed that over the past 20 years, housing prices in Beijing have consistently risen. Now, however, the situation has completely reversed, with a real estate crisis emerging that has shattered the myth that housing prices in the capital only rise. Prices have generally fallen by 30-40%, and transaction volumes continue to decline.
Simultaneously, there is a noticeable trend of population outflow, particularly among the youth, with a significant exodus. Between 2015 and 2024, the number of young residents in Beijing is projected to drop from 4.618 million to 2.489 million, a total decrease of 2.129 million, with the proportion of young people falling from 21.3% to 11.4% annually. On average, Beijing loses about 210,000 young people each year over this decade, with a particularly sharp decline of 550,000 in 2020 alone. In any region, an increase in population outflow inevitably leads to a downward trend in housing prices.
Li Tingqian noted, "The recent policy from Beijing to further relax purchase restrictions fails to address the fundamental issues on the demand side. It allows housing to revert to its essential characteristics, alters people's income expectations, and re-establishes homes as a means of wealth appreciation. The current 'squeezing toothpaste' approach is at odds with public expectations."
Public sentiment: 'Deceptive leverage' drains the last reservoir
In discussions on social media and among the public, there is a clear awareness regarding these policies. Many express that utilizing public housing funds to prop up the real estate market is an attempt by the authorities to push the last bit of relatively secure savings and benefits from ordinary citizens into the 'bottomless pit' of real estate.
In response to policies that lower entry barriers, young netizens are resolute in rejecting the role of 'the ones who take over': 'The thresholds may have been lowered, but the total price and mortgage remain unchanged,' and 'It's not that I don't want to buy; it's that I can barely hold onto my job.' With a nationwide trend of declining marriage and birth rates, the future demand for housing is virtually nonexistent. Purchasing a home at this juncture is akin to 'catching a falling knife.'
According to The Epoch Times, Weibo users have commented: "The policy has indeed been slightly relaxed, but in reality, most people still can't afford it." "It seems like this policy isn't really effective; those who can't sell still can't sell, and those who aren't interested in buying remain indifferent." "As the saying goes, what we lack isn't housing tickets, but money!"
Weibo influencer and prominent user "Liu Ye A Dan" expressed, "My first reaction to this is that we still haven't reached the bottom. Typically, when we hit the bottom, there's no need for favorable policies. The existence of such policies suggests that the market is still unstable."
Self-identified as a new media navigator and writer, Weibo influencer "Yu Haiqing" stated, "When addressing the housing issue, we should view each stage with the perspective appropriate to that stage. If these policies had been introduced a few years ago, the situation would have been different. However, the current circumstances are significantly different from those in the past; the main issue is that the public currently lacks money, and there is a sense of panic about many unpredictable future events. People feel that keeping their money close gives them a sense of security, and they prefer to hold off on buying if they can. Therefore, the best strategy in this situation is to take decisive action, although this approach has its own drawbacks. Sometimes, taking decisive action may not lead to the expected outcomes, but it is certainly better than a slow, gradual approach. Currently, there are still some individuals in the market who have money; they can choose whether to buy or not, and this group requires some incentives."
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