Over much of the past decade, China’s efforts to curb real estate speculation have become more widespread and extensive.
Shanghai declared that divorced people would be restricted from buying apartments for three years to combat couples who split up only to buy a second home for investment purposes. In Chengdu, in western China, only local residents who paid social welfare taxes and won the lottery could buy a new home. In the northeastern city of Tangshan, people buying a home had to hold onto the property for at least three and a half years.
Those restrictions were lifted along with restrictions elsewhere as China tries to recover from a deep real estate slump. Since last year, more than 25 Chinese cities have lifted all restrictions on property buying, after many local governments lifted rules banning developers from cutting prices.
Last month, the central government went further, lowering down payment requirements, easing mortgage regulations and encouraging local governments to buy up unsold homes to turn them into public housing.
But some of China’s efforts to stimulate home buying have angered existing homeowners, one of the country’s most vocal constituencies.
Many Chinese homeowners who have saved up for apartments – their biggest investment – worry that deregulation will drive down property prices, as the new policies fuel a “not in my backyard” sect of sloganeering in the Communist Party-ruled country.
China’s government is grappling with a tough challenge as it tries to deal with the collapse of an industry that accounts for a quarter of the country’s economy. Discontent with the economy could destabilize society, but so could a rebellion by homeowners, many of whom hope their properties will create wealth for future generations.
Many of the restrictions have been lifted by the same policymakers who imposed them just a few years ago, to comply with Chinese President Xi Jinping’s edict that “housing is for living in, not for speculation.”
When Chengdu lifted the restrictions in late April, one person filed a complaint on a government website, arguing that the rules were unfair to people who had earned the right to buy homes when they were in place. The person said they had moved to Chengdu and paid social security taxes for several years to qualify for a home purchase, according to the complaint.
“Being eligible to buy a home in Chengdu was an honor and I thought it was proof of how hard I had worked,” the person wrote. But now anyone can buy a home, even those who “haven’t contributed anything” to the city. He called on authorities to “reinstate the purchase restrictions as soon as possible.”
One of the rare acts of defiance in China in recent years came from homeowners: Hundreds of thousands of Chinese homeowners banded together and refused to pay loans on partially completed properties starting in 2022. Since then, the government has prioritized policies to encourage developers to complete construction on properties they have sold.
Alicia Garcia Herrero, chief Asia-Pacific economist at investment bank Natixis, said it would be hard to lift restrictions to stimulate buying as it would reinforce fears that something is wrong in the market.
“It’s very difficult to lift it in time and it’s usually too late,” Garcia Herrero said. “It’s not a solution in any way.”
New home prices in China’s biggest cities have fallen for 11 straight months, falling 0.6% in April from the previous month, according to the National Bureau of Statistics, with similar declines seen in smaller second- and third-tier cities.
The price crash is a recent phenomenon: local and city governments have prevented real estate companies from slashing prices too much – restrictions were introduced to stop developers from excessively inflating prices.
But toward the end of last year, as the economic downturn dragged on and homes became harder to sell, local governments began allowing real estate developers to significantly reduce prices.
In November, responding to a complaint left on a government website, Chengdu city authorities fined a local property developer for underpricing the project, saying it was “disrupting the normal order of the property market.”
Five months later, homeowners again complained that developers were undercutting their prices, but they were ignored. Chengdu city authorities said they had taken no action because the developers were applying “market prices.”
Fei Liu bought a four-bedroom apartment in downtown Xi’an in January for about $420,000. Then she learned that state-owned developer Poly Group was offering a discount of about $40,000 to recent buyers of a similar apartment. Liu said she learned that the developer’s salespeople had pressured buyers to make down payments, then announced a steep discount the day after they received them.
“Anyone would be outraged,” said Liu, 27. “It’s a total rip-off of consumers.”
Liu said residents of his apartment building had called the Xi’an mayor’s office, demanding compensation equal to the discount. Officials responded by likening the discount to a shopping mall sale and saying they had no right to stop it.
The protesting homeowners feared that Poly would cut corners on construction to make up for money lost on discounts. When some of the homeowners went to Poly’s office, they were confronted by police officers who warned them not to bother or interfere with the operations of the state-run enterprise.
“This is a conspiracy between the government and developers,” Liu said.
Poly did not respond to an email seeking comment.
The government’s price easing addresses two long-standing issues.
First, it will free up capital for debt-strapped property developers to make interest and loan repayments, and second, it will reduce the stock of unsold homes: Australian banking group ANZ estimates it could take 3.6 years to clear all of China’s unsold properties, 50 percent longer than it took during China’s last property crash in 2014.
Government plans announced last month to convert unsold homes into subsidised housing have been a particular source of friction, with some homeowners unhappy with the mix of social housing and private developments.
Last month, a person complained on a Sichuan provincial website about a local state-owned enterprise converting some of its new housing builds into public housing. The person, who bought a home in the complex two years ago, said more than 100 new apartments are being converted into public housing without any consultation with existing homeowners. In the complaint, the person expressed frustration at having to pay high property prices while only getting “public housing quality.”
“The community’s values have plummeted,” the person wrote. “Property owners who purchased homes are suffering unspeakable misery.”
In its response to the complaints, the state-owned enterprise said it upheld national policy and that housing was subject to “market-regulated price controls.”
Kevin Duan, who bought an apartment in a nearly completed housing complex in the central Chinese city of Changsha, said one of the 20 buildings in the complex is set to become public housing. Homeowners are outraged and are demanding that the low-cost housing be separated from the rest of the complex.
“There should not be public rental housing in a commercial housing community,” Duan said. “If I had known from the beginning that it was going to be a complex with public housing, I would never have considered it.”
