Hello, welcome to Roundtable, where we serve up piping hot debates on the issues that sizzle in China and beyond.
I'm Yuhong Lin. What does it mean to have a home of your own?
For some, it's a symbol of success and security.
For others, it's just a financial burden waiting to happen.
As ideas around family, independence, and stability evolve, so do our views on buying property.
Today, we'll explore the shifting landscape of homeownership, why younger people are rethinking the dream of owning a home, and why women, more than men, are still chasing it.
For this episode, I'm joined by Steve Heatherly and Dean Hung.
Now grab your virtual compass and follow us to the heart of the discussion.
Owning a home has long been tied to concepts of security and belonging.
But with today's soaring prices and changing social dynamics, fewer people, or at least some fewer people, are rushing into it.
Why do some still see a house as essential, and why do others prefer the freedom of renting?
Today, we'll unpack new trends in house buying, what's changing, who's buying, and what it all means for our idea of home.
To start with, we see that according to a, let's say a new report, some young people are having different ideas or at least have different reasons behind buying a home, renting a place for their, you know, new chapter in their lives.
I think in China, this is where culture crosses with Canada and many other countries around the world.
I like to focus on cultural similarities as much as we like to talk about cultural differences as well.
Here in China, you grow up, you go to school, you study hard, you go on to university, you study hard there, you go out, you enter the workforce, you get a job, maybe you get married, you have kids, and you buy a home.
That's exactly the same as what life is quote unquote supposed to be in Canada and in America and in England and Australia and many countries around the world.
That concept is changing in Canada.
It's changing now in America about home ownership and it seems to be that it's changing here in China too.
Yeah, so I guess we are basically looking at a specific study here because according to this study, which is conducted by a unit of Chinese news outlets Yi Tai earlier this year in June, over 43 % of the respondents in the survey still saw buying a house as a must in their life, which is 10 % higher than those
who think buying a house is not necessary.
Some 23 to 24 % said they were not sure.
Only 5 .7 % said no to considering buying a home.
So I guess overall, many people are still holding this maybe wait and see attitudes on my side.
If you do the math on those numbers, 33 % say it's not necessary, 23 % say not sure, 5 % say no, we don't want to buy a house.
Well, that's 50. I'll do some math here, 55, 60.
That's 60 % who are not on the I definitely want to buy a home side.
Of course, with statistics, we can manipulate them to kind of tell any story that we want to.
But still, I think it's an indication.
It could be an indication of many things, cultural changes here, maybe people are just happy renting, they prefer that freedom, maybe it's too expensive, the housing market has outpriced people, young people looking to become a homeowner.
But yeah, those statistics, they don't they don't lie.
We're seeing a little bit of a shift, I think.
Yes, because originally, or at least traditionally when it comes to, like Steve had just said, when it comes to growing up, start a family, buying a house seems to be a must.
Yet we're still not seeing people saying we definitely don't want one only 5 % of people saying we definitely will not buy a house.
So I think compared to statistics, or how many people are saying yes, how many people are saying we're waiting to see, I think more interesting about this report is the reasons behind it.
And also the different ways to categorize these people surveyed in terms of gender, age, location and life stages when they list the specific reasons.
Yeah, let's have a look at some more numbers from those groups that you talked about.
So by gender, 45 .8 % of female respondents think that buying a house is a must that's 5 % higher than their male counterparts.
37 .3 % of male respondents said it's not necessary to buy a house 8 .5 % higher than female.
That's by gender. By age, over 30 % of people in each age group born from 1975 to 2009.
That's a big group.
They think buying a house is not a must.
However, as people get older, more and more people think that they have to buy a house over 50 % born between 1975 and 1989, 45 .5 % born between 90 and 94, 39 .2 % between 95 and 99 and then 36 .9 % born in the 2000s.
Seems like as people get older, they start to think, well, maybe I do actually need a place to call my home.
I want to ask you this question thing, Hoang, because I think you're rightfully into the group of male and in the sense that you've already started family and I'm not going to call you middle -aged yet you're mature enough to think about the question.
So do you own a place or are you renting?
I own a place. Yeah.
Why did you make the decision of purchasing a home?
What was the factors?
Yeah. And was that a really difficult family decision?
Well, I think to start with, actually, when I, the first time I bought a property that was actually before I got married.
So I think nowadays there is a widespread perception among not necessarily young people, but people in general in China today that if you own a property, if you own an apartment in whatever city, regardless of the size of your home, the simple fact that you owns it will give you, will provide you with a great sense
of security and will also make you probably more competitive in the marriage market as well.
What was your, what was your, not your motivation, but what was the mindset when you purchased?
Were you thinking I'm doing this as an investment where 10 years down the road, 20 years down the road, I can see a return on my investment.
Were you thinking security for your future and your family's future?
Which mindset did you have?
Yeah, I think it's actually a combination of both.
Both mindset work worked for me because that was eight, seven to eight years ago.
So back then in China there was, especially in big cities like Beijing and Shanghai, there was still this housing boom at the time, right?
So prices were soaring and rising.
So this kind of investment and seeking monetary return, this kind of mindset did exist at the time.
But in the meantime, it's also for the sake of security.
Yes. Actually, I had a friend, a girl, and she's still single and she purchased her house around five, six years ago.
And her reason was quite simple.
It was because she didn't want to move around too much because if you're renting, then the house owner would be able to tell you to move out if they have necessary situations and also you do not get to decorate your home, even if you're calling it your home.
So for her, it's to improve the quality of her lives.
But there are a lot of reasons here in the report as well.
Yeah. And the housing market here in China got some big news in 2024 too.
This is from Global Times from May of this year, the People's Bank of China, the country's central bank and the national financial regulatory administration announced that the minimum down payment ratios for individuals commercial housing mortgages would be lowered to 15 % for first home purchases down
from the previous 20 % and 25 % for second home purchases.
If you're lucky enough to be able to purchase a second home.
Yan Yu Jin, the research director at the Shanghai -based E -House China R &D Institute said this is the lowest down payment ratio in history, the slackest policy in the history of mortgage lending and the most lenient property policy in recent years.
And this is also an important embodiment of mortgage interest rate marketization.
In the past, the lowest housing loan interest rate in some cities was 3 .5%.
But under this new policy, banks can decide the interest rate themselves and even an interest rate below 3 % is possible.
This is big, big news.
And if you search this story on the internet, that's from the Global Times, the story that I reported from.
But you can find the New York Times talking about this, plenty of international media outlets.
This was big news worldwide.
And it was big news for potential homeowners in China as well.
Yes, and actually this is not an easy decision to make.
By saying easy decision, I mean the details of the policies actually went through a lot of discussion and we have a lot of experts doing research on it because the essence of it is that we want to encourage people who wanted to buy a house have better preferential policies buying it to have the support
and needs from the society.
Yet we do not want making investment or using houses or buying houses as a way to get money in the way that they have already got, let's say enough money and they are making it as a how to put it, it's kind of like doing the investment in the wrong way, especially in first year cities like Beijing and Shanghai
in the places that when they make property and investment and it leads to a really huge rise in the prices of the departments and houses resulting in people who actually needs it finding it difficult to purchase a house.
So it's a very delicate policy and we are seeing this encouraging.
And actually if you take a look at, for example, Wuhan in Hubei Province, actually in Hanyang District, it experienced its busiest golden week in five years following the release of the new housing policies.
Actually 19 properties on sale saw heavy traffic with 440 units sold marking a 124 % increase from the previous year.
And you see the Hanyang sales volume ranked first in the city during this period.
So after the release of the policies definitely we are seeing a surge in the housing market.
But meanwhile when people are making the decision of whether or not they want to buy a house or they want to rent, especially for the young people here in the country, actually there are so many factors besides just economic factors.
Yeah, well there's economic factors to be considered.
And when we go back to the question of do people want to buy a house or not?
I think in a vacuum when you say do you want to own a home?
Everybody will say yes.
Who's going to say no to this, right?
But yeah, there are a number of factors to be considered and one is where you live, where you are working because housing markets vary in prices of course depending on where in the country you live.
Yeah, exactly, exactly.
And I guess currently there is also the actual housing policy in different localities.
It also varies from one locality to different locality.
And yeah, I feel like for young people buying a house is more about personal consideration rather than planning for other people.
Because again going back to this buying a house to settle down in the city is their primary consideration.
30 percent make the purchase for personal pension needs.
Like an investment?
Yeah, and marriage only ranks third on their motivation.
We're talking about 26 percent or something followed by childbirth, schooling.
That's the consideration for their family members.
And if you had asked this question, if this survey had been conducted, I don't know, 25 years ago maybe.
Maybe marriage and children would have been closer to the top of the list, but we've talked about it on Roundtable.
People are getting married later in life now here in the country.
Surveys conducted asking people do you even want to get married at all.
So it's not surprising to see those numbers a little bit lower and the investment idea or the investment strategy a little higher on the survey result list.
And apparently since we are always associating houses and homes with success or even more importantly security, we see a difference when it comes to different gender.
More women regard house purchases as a backup plan.
The proportion of buying for pension life along female respondents is around 20 percent higher than that of male respondents.
On social media platform The Red, the hashtag Single Women Buying Houses has reached nearly 13 million views.
A lot of women are saying buying a house before marriage is kind of like having a security net, having a backup plan, a plan B.
It's not like they do not believe in love.
It's more like we want to be independent.
We want to make sure that we have the ability and even the financial ability to quote unquote protect ourselves before we get into the marriage.
You know best wishes and also plan for the worst.
Yeah I think that's actually a encouraging signal in China's society nowadays that's definitely representing a social progress so to speak because today's Chinese women there many of them are highly educated with very decent job and highly economically independent.
Why not buy their own property before they find the right partner?
I mean yeah. Sense of security.
How much are people willing to pay for a house?
That's an important factor to consider as well.
38 percent of people who responded to this question said that they would accept a house price equal to six to ten times higher of their current annual salary.
About 20 percent would accept a house price which is one to five times or 11 to 20 times higher than your annual salary.
That might be difficult I mean depending it's going to depend on how much money you make per year but it might be challenging to find a house that's only six times higher than your annual salary if you're looking to buy that house.
Definitely and here I want to ask you this a little bit counterintuitive question and the question is do you think rent well compare renting and buying a house which one is more expensive?
Well it depends on how many years you're renting.
Exactly very smart that is the thing because if we consider it in this way let that is find a cheap alternative.
Well let's say renting is kind of like a cheaper alternative than purchasing a house if you think you're living in big cities like Beijing and Shanghai or in Tokyo or New York City then the price to rent ratio exists around 60 and given that property rights in China here limited to 70 years they go
to the conclusion that if I need to spend that kind of money to rent maybe renting is even cheaper than purchasing.
Yeah sorry finish your thought.
I'm just saying some people would think that way but actually I what I'm trying to say here is it's not exactly like that because you have to consider the fact that the rent will increase maybe faster than it appears in bigger cities actually in bigger cities you get to see that the constant need for renting
is always there you have people getting into the city trying to settle down and with the increase of for example if you take inflation into consideration then the renting would go higher and higher and higher gradually and in that sense the sum or the whole amount of money you need to purchase a house
might even be less than the amount of money that you need to spend on let's say renting for 60 years.
Sure yeah but then again there's a flip side to that coin when you get a mortgage and buy a house you're paying for things like property taxes you're paying for things like home repair and upkeep those are the unforeseen future costs that will inevitably come and you're also paying for the interest
rate on your loan. I went on to the onto a mortgage loan calculator earlier today and I forgot the information upstairs in the office but I think I can remember if you purchase an $800 ,000 home and by the way I looked up some property price differences for different cities around the world.
Vancouver average price is 1 .2 million dollars for a home the average Los Angeles 867 ,000 Tokyo 800 ,000 for a new apartment as of 2023 London was 690 ,000 pounds.
Let's use Los Angeles for an example if you got a 30 -year mortgage at $800 ,000 with a 10 % down payment $80 ,000 the math came out to roughly $4 ,500 a month of a payment for 30 years you're covering the interest and then you're also covering you know your payment to repay your loan for a lot of people
that's not even that's not even possible it's not attainable considering the current economy so of course $800 ,000 is a very expensive property but what I'm saying is that yeah renting might be a more feasible option because it would cost you more in the long term according to your math but at the same
time it's more affordable in the short term.
Yeah so I think at the end of the day it is still a very personal decision to make and it has a lot of different factors which means you do also have a lot of choices and you have a lot of options what you do need to do is to you know do a very thorough research because at least here in China we know
four different places like Dingheng said different localities in different provinces actually there are different policies for example in Shandong province we have this youth superior living plan and it aims to address challenges at different stages we have situations like temporary housing short -term
rentals and home purchases different kind of policies for young people and they have even established a youth lodges providing over 550 locations built across all counties and cities and providing over 8 ,300 rooms for young people to rent in a relatively preferable policies and prices and there's also this youth
communities around offering over 9 ,000 units of these places that young people wanted to settle down and trying to find a place to rent to live in and also in Hangzhou it is actually the first city in China to remove the household registration restriction for public rental housing so with this hukou
system usually because this fair this substantial policies are for local people residents living in provinces and cities like such but actually Hangzhou has restricted or moved that lift that policy that restriction to only people with a hukou in Hangzhou for actually the young people so newly employed
university graduates without local hukou are eligible for this and actually 50 or 45 percent of public rental housing beneficiaries are recent university graduates so same similar policies are also in Changcheng in Hubei and in a lot of different places and we get to see that local governments are doing
they're are doing their parts to improve the livelihood of young people yeah yeah and there is also initiative to you know to encourage some locally owned state -owned enterprises to purchase some of the unsold commercial housing and it convert them into affordable housing projects for the lower income
people that's also another banal initiative being carried out by many local governments so yeah i think when home prices are soaring very quickly probably it's it's worthwhile to buy a property than to rent but if we're talking about a situation where home prices are stable or even dropping probably
a rental is also a very good alternative as well and i generally support this idea that house is for living not for investment because i think from a social perspective it is a good thing that people in china are stopping viewing housing as a preferred asset class i personally think it is a ridiculous
idea if your value is largely determined by how much apartments you own it's it's ridiculous warren buffett i was watching an interview with warren buffet yesterday he said buying a home is a terrible investment because you're going to make about seven to eight percent over a very long term he told
a story when he and his wife got married he had ten thousand dollars in capital and he said to his wife we can buy a home with i can use all of this money or you can let me use this money so that maybe in the future we can buy an even nicer home than the one you want now his wife said okay warren you
go ahead and turn that into billions and billions of dollars which he did and of course we're not all warren buffett that's what i'm trying to say here that's his personal story about homeownership yeah so in the meantime because of this continuously significant role played by the property sector in china's
overall economy i guess china's policymakers also don't want to see home prices drop too quickly or too dramatically so uh making a balance here it's quite important and i think we are on the right track we're making sure that for those who do want to make the purchase we're you know in the watch wait
and see a category are making their decisions based on some preferential policies yeah and those policies of uh you know banks setting up their own interest rates for mortgages around three percent that's pretty reasonable and lowering the deposit for uh potential buyers that's a big deal as well so hopefully
this will this will spur the housing market yes so that for those of you who steal associate houses with security and success you get to buy a house and there is one thing that we have learned today that is it is home is that home ownership isn't a one -size -fits -all decision it's about balancing financial
goals personal priorities and long -term security whether you're aiming to buy a house or planning to rent long term the key is to make intentional choices that support the life you want to live
