We’ve translated an article from China Economy (original article in Chinese), highlighting why the average home buying age in China is going down, despite the increasing prices. China Economy’s interviews with Chinese people highlight a host of social pressures facing Chinese today: from marriage, to keeping face, to hukou and residency requirements. Thanks to niubi for highlighting this article on Twitter, and please leave us comments on what you think.
In the past 3 years, the average age of first-time house buyers in the United Kingdom rose from 33 to 37 years of age. In Japan and Germany, it is 42 years old; while it is 30 years old in the United States. However in a report released by the China Everbright Bank and a real estate research firm, those applying for housing loans in Beijing have an average age of 27 years old which is younger as compared to developed countries.
So that they could own a house, many Chinese do not mind working almost half of their lives just to pay off the bank loans. Owning a house in China is not just for residential purposes. It is now considered a marriage prerequisite and shows one’s financial capability. Other than that, it reflects on the unrealistic urgency of young people agonized by material desire and the shaky housing system in China.
As Li Daokui, professor at Tsinghua University and a member of the Chinese central bank’s monetary policy committee, says, “It is more than [just] a bubble problem,” Li says. “When prices go up, many people, especially young people, become very anxious. It is a social problem.”
Here are the reasons why the Chinese young people rush to buy houses–
Because of marriage? Kids? To take advantage of early housing prices? To feel more secure?
If you cannot buy at the age of 27, then the more you cannot afford by the age of 40.
If the young Beijinger at 27 years old is not able to afford a house, then the more he can not afford one once he reaches the age of 40; because our income will never catch up with the rising house prices. The reason people living in developed countries are only able to buy houses by the time they turned 40 is because their housing prices are very stable. Da Bing, netizen
If you do not have a house, how can your kids get a hukou?
Is there sense to always compare with foreign countries? People from other countries can move locations freely without need of a hukou. In Beijing, if you do not have a house, you do not have a hukou. How can your kids study then? Mama79, netizen
One of the marriage requirements of women is a house.
Even if it says that the average age of people who buy houses is 27, it does mean that those 30 years and above do not need to buy a house. It just shows that the demand is greatest for those 27 years of age. Do you know why? It is because of the pressure of marriage. The women will demand a house to live in. In the United States and Europe, there is no such marriage prerequisite. sun-yuepingso, netizen
If you do not buy a house early on, even renting at a later time might not be affordable anymore.
In China, housing prices double a year. So at 27 if you do not pool your and your parents’ money to buy a house, by the time you reach 72, even with your grandparents’ money you cannot form the down payment. wxy690so, netizen
People abroad have sufficient low-cost housing.
In China, there is none. Moreover, what kind of house can the 27-year-old Chinese buy? One-bedroom-one-living-room can only be considered as an apartment, not a house. 42-year-old Americans who buy villas–that is a house. Majority of Chinese can not afford to buy a house in their lifetime. zhangfengyu, netizen
If you have a house, you would not feel so anxious.
The saying before is “as long as you have food, you would not feel so anxious”. This time, “as long as you have a house, you would not feel so anxious.” Coming from someone like me who is from another province, even having a small house gives me peace of mind. Sisi, netizen
What does this attitude of young people reflect in the society?
An abnormality in the community? Something wrong with their thinking? Flaws in the housing system?
If the husband does not have a house, it is very embarrassing for the wife.
Nowadays, marriage in China has turned into a circus of materialism. This is a huge change in Chinese society. No matter how confident a woman is, if her boyfriend or husband does not have a house, it will cause her to lose face. Shanghai University of Political Science Women’s Studies Center Director Chen Xiaomin
Buying a house for marriage purposes is an abnormal social phenomenon.
Even in high-income communities, most will only consider buying a house after the age of 35. Young people now are impulsive decision-makers. China-ECapital CEO Wang Ran
What is the cost of prematurely buying a house?
Buying a house too early could affect one’s personal development.
Most young people have planned out their careers. But once they buy a house, their plans could change. I have seen many young people turn down a lot of opportunities, because they have tackled the first steps into acquiring a house of their own. Finance commentator Wu Qilun
Getting a housing loan affects not just one generation.
Says the Chief Economist of the National Bureau of Statistics of China–
House prices in Beijing are absolutely ridiculous. When a young couple purchases a house, parents and grandparents from both sides need to help out. The collective effort of four families is required to support a young family’s decision to buy a house. Three generations of savings are thus exhausted in buying a single house.
How can we prevent young people not to worry too much about this?
The government should pay attention to this issue.
By controlling the housing prices, young people would not feel the pressure of buying early on and thus engage in panic-buying. Thus, this would also lead to a healthy development in the Beijing real estate market. Homelink Vice President Lin Qian
Germany provides a good model.
In Germany, 42% of people own their houses; while 58% rent them. 77% of the young Germans live in rented places. The German government also encourage their people to build their own houses so as to break the monopoly engaged by housing developers. The housing prices in Germany has not changed in 10 years. Chinese Academy of Social Sciences Institute of Industrial Economics researcher Cao Jianhai
Indeed, having a house is a prerequisite for marriage.
When there is just one child in family (one-child policy) – it’s possible for three generations to combine their efforts in buying a house. I hardly can imagine what the situation is for families with 2 and 3 children [by the way, it could be another reason for differences in China and Western countries].
Interesting. I’m curious about the housing situation in 20-30 years.
Another reason (as I understand) some parents are able to bank-roll their childrens property purchases is due to the incredibly cheap (some times essentially free, as I’m told) government units they were able to purchase when housing was first commodified in the 1980′s. Despite being older housing stock, these unit prices have increased astronomically, enabling that generation not only to save cash in lieu of mortgage payments, but also to make an insane profit off a sale.
Combined with generational attitudes regarding thriftiness/saving I’m curious about the ability of today’s home-buyer to be able to bank-roll his/her children the same way their parents did.
The only solution I can see is creating better access to affordable and reliable credit and possibly utilizing 100-year mortgages, which are used in some parts of Europe (from an angle of adaptation to future conditions…if present trends continue).
I tend to view policy side as being more important…adhering to the idea that housing is a right, encouraging and demanding proper housing typology from developers, hukou reform in relation to housing, discouragement of speculation…all very tough given the obvious overlap with other topics.
Seeing how houses aren’t owned in China, but leased from the gov for 70 odd years, buying such a lease with a 100-yr mortgage would feel even worse than renting :D
This is an insoluble problem for urban China.
Marriage. Circus of materialism. Yes, marriage is first and foremost an economic calculation.
Re Europe. Many Europeons enter into very long housing leases and this very stable leasehold market is strongly supported by govt policies, thus it is a viable alternative to buying.
Dual track market, which directly contrasts with China’s axis of evil, provincial govt officials, state banks and real estate developers.
Also definitional problems from a western perspective. An apartment/highrise dwelling is not a house. A house is an unattached building on a piece of freehold land with a front and back yard, something which is simply not possible in China due to land scarsity, stratospheric costs, etc.
Consequently, and unless you live in the country, building your own ****house/apartment**** in urban China simply aint possible.
In many countries where freehold exists, a landowner can do a short DIY owner builders course, and then proceed to build their own house, if they have the skills to produce something which passes local building regulations. In my neck of the woods, this cuts almost two thirds off building costs.
I think we are talking about apples and oranges here. Good piece.
Fascinating article. Sad but really a great insight into the culture.
I’m thinking of some kind of sad piano music behind it…
can the bubble persist? How will it pop??
Freehold tenure would probably provide a incentive to construct not only more diverse forms of housing than is presently available but also help maintain quality over present housing stock (renovations, maintenance etc.).
One often used rationale for hutong clearance and replacement (along with other building forms) is ‘poor quality housing/buildings’. Fair enough, yet hardly any opportunities are provided for ‘owners’ to improve their properties with tenure so uncertain.
Unfortunately, freehold tenure is generally absent in China’s land use toolkit…and unlikely to appear in the foreseeable future
You can’t use Germany as a comparison because no one wants German land.
How about just calling an egg an egg and a whore a whore. If a girl doesn’t have a job and her entire goal is to find someone with a house then that is her occupation. Therefore, really expensive whore….solution legalize prostitution. When you have limited supply then the cost of the product goes up, luxury goods. But if you change the goods to necessary goods then the cost goes down, then your property prices go down.
Economics answers all.