For much of the last decade, China’s efforts to curb real estate speculation grew broader and more extensive.
Shanghai declared that anyone who divorced would be subject to restrictions on buying apartments for three years, to counter couples who split up just so they could buy second homes as investments. In Chengdu, western China, only local residents who paid social welfare taxes and drew a winning ticket in a lottery could buy a new home. In the northeastern city of Tangshan, anyone who bought a house had to keep it for at least three and a half years.
Those restrictions, along with limitations in other regions, have been lifted as China tries to revive a serious housing crisis. Since last year, more than 25 Chinese cities have removed all restrictions on real estate purchases, as many local governments removed rules that prevented developers from reducing prices.
Last month, the central government went further. He reduced down payment requirements and relaxed mortgage rules, and urged local governments to buy unsold homes and convert them into public housing.
But some of China’s efforts to spur home buying have upset one of the country’s most vocal voters: existing homeowners.
Many Chinese homeowners, who saved to buy apartments that serve as their main family investment, now fear that the easing of restrictions will depress their property prices. The new policies have given rise to a dose of NIMBY-ism, short for “not in my backyard,” in a country ruled by the Communist Party.
The government must thread a needle as it tries to address the collapse of an industry that accounts for a quarter of China’s economy. While discontent over the economy could shake social stability, so could a backlash from homeowners, many of whom cling to the hope that their properties will generate wealth for future generations.
Many of the restrictions were lifted by the same policymakers who had introduced the rules just a few years earlier to adhere to China’s leader Xi Jinping’s decree that “houses are for living, not speculation.”
When Chengdu lifted its restrictions in late April, one person filed a complaint on a government website saying it was unfair to people who had earned the right to buy homes when the rules were in place. The complaint said the person had moved to Chengdu and paid social security taxes for several years in order to buy a house.
“I considered being qualified to buy a house in Chengdu an honor and proof of how hard I worked,” the person wrote. But now anyone can buy a house, even those “who made no contribution” to the city. The person asked that officials “restore purchasing restrictions as soon as possible.”
In recent years, one of China’s rare acts of defiance has come from homeowners. Starting in 2022, hundreds of thousands of Chinese homeowners banded together and refused to pay loans on half-finished properties. The government has since prioritized policies urging developers to complete construction on sold properties.
Alicia García-Herrero, chief economist for the Asia-Pacific region at investment bank Natixis, said it was difficult to encourage buying by removing restrictions because it reinforced concerns that something was wrong in the market.
“It’s very difficult to get them up in time; it’s usually too late,” García-Herrero said. “It is not a solution under any circumstances.”
New home prices in China’s largest cities have fallen for 11 consecutive months. In April, they fell 0.6 percent from the previous month, according to China’s National Bureau of Statistics. Prices also fell by a similar amount in smaller second- and third-tier cities.
The drop in prices is a recent phenomenon. Local and municipal governments had prevented real estate companies from drastically reducing prices. The controls were put in place to prevent developers from raising prices too aggressively.
But towards the end of last year, as the slowdown persisted and it became harder to sell houses, local authorities began allowing developers to cut prices.
In November, Chengdu officials, responding to a complaint posted on a government website, penalized a local developer for cutting prices below the list price, saying the project was “disturbing the normal order of the real estate market.” “.
Five months later, another complaint from a homeowner about developers cutting prices was rejected. Chengdu officials said they were not taking any action because the developer was using a “market-adjusted price.”
In the central city of Xi’an, Fayre Liu bought a four-bedroom apartment for about $420,000 in January. Later, she discovered that Poly Group, a state developer, was offering newer buyers discounts of about $40,000 on similar apartments. She said she learned that the developer’s sales staff pressured buyers to make a down payment and then announced deep discounts a day after receiving deposits.
“Anyone would be very angry,” said Liu, 27. “You are completely defrauding consumers.”
Ms. Liu said the owners of her apartment complex had called the Xi’an mayor’s office to demand that they receive compensation equal to the discounts. The authorities responded that they had no right to suspend the discounts, comparing them to a sale in a shopping center.
Protesting homeowners feared Poly would cut corners in construction to make up for money lost from discounts. When some owners went to Poly’s offices, they were confronted by police officers who warned them not to cause problems or disrupt the state-owned company’s business.
“This is collusion between the government and developers,” Liu said.
Poly did not respond to an email seeking comment.
The government’s relaxation of price cuts addresses two long-standing problems.
First, it allows money to flow to indebted developers to make interest payments and repay loans. Second, it reduces the inventory of unsold homes. Australian banking group ANZ estimated it would take 3.6 years to process all unsold residential properties in China, 50 percent longer than in the country’s last major housing crisis in 2014.
The government’s initiative, announced last month, to convert unsold homes into subsidized housing has been a particular cause of friction. Some homeowners are unhappy with the mix of public housing and private development.
Last month, someone filed a complaint on the Sichuan province website that a local state-owned company was converting some of its new houses into public housing. The person, who had bought a home in that complex two years earlier, said more than 100 new apartments were being converted into public housing without consulting existing owners. In the complaint, the individual expressed his displeasure at having to pay high prices for the property and still receive the “quality of public housing.”
“Community value has plummeted,” the person wrote. “Homeowners who have bought houses suffer unspeakable misery.”
In response to the complaint, the state-owned company said it supported national policy and that homes were subject to “market-regulated price management.”
Kevin Duan, who bought an apartment in a nearly completed complex in the central Chinese city of Changsha, said one of the complex’s 20 buildings would be converted into public housing. He said the owners were furious and demanded that the affordable housing be separated from the rest of the complex.
“A commercial housing community should not have public rental housing,” Duan said. “If I had known from the beginning that it was a public housing complex, I definitely wouldn’t have considered it.”