Hong Kong —
For the past 30 years, China has been a nation of homeowners, growing the world’s second-largest economy and making the dreams of millions of people come true.
Since the decline and eventual end of welfare housing policies in the 1990s, government programs have coalesced with deep-seated cultural norms to create a level of private ownership unfathomable in the West.
While tens of millions of Americans are saddled with student loans, many entering their 30s and renting is their only option, their Chinese peers are starting to plan to buy their first home right after graduating from college.
But a slowing economy and crisis-hit housing market could change that.
New home sales last year fell to the lowest since 2014, totaling just 7.3 trillion yuan ($1.06 trillion), compared with 16.2 trillion yuan ($2.3 trillion) at the height of the boom in 2021, according to official figures.
Economists at Macquarie Financial Group said in January that new home sales fell 8.7% last year and there was “no end in sight” to the downward trend.
Many prospective buyers are now cautious about taking out a mortgage.
Among them is Beijing-based graphic designer Cai Youcheng, 36, who has put her purchase plans on hold for now. He said renting feels like a nomad and he hates not being able to decorate his apartment the way he wants. But he will likely stick with the loan for now.
“Personally, if you think about it, I think it makes more sense to rent, but deep down I still really want to have a place of my own.”
This feeling is common in a country of 1.4 billion people, where home ownership means more than just a sales deed.
In Chinese culture, owning real estate means more than economic security and social status. Eric Fung, chair professor of sociology at the University of Hong Kong, said this suggests that people value their families.
“Traditional Confucian values place great importance on family, and everything should start with family,” he says.
Starting in the 1980s, when China’s Communist government began a period of ferocious economic liberalization, traditional trends were given permission to run wild. Reliance on employer-assigned housing was reduced and private ownership was strongly encouraged. This promotion accelerated in the 1990s with the introduction of large amounts of subsidies.
“Many people became homeowners overnight at a very low price,” said Huang Yuqing, a professor of geography and planning at the University at Albany. “This has turned a lot of people who were renters into homeowners.”
This took advantage of another important principle of Chinese culture: strong thrift habits. With real estate prices soaring, home ownership has become the most popular investment, leaving few other options to accommodate growing personal wealth, Huang said.
Research also points to other intangible benefits. Rural immigrants feel more accepted if they own a home in a familiar city, while parents may buy their children an apartment to increase their chances of marriage.
All of this contributes to China having one of the highest homeownership rates in the world, with nine out of 10 households owning their own home, according to multiple studies and academic journals.
Over the past two decades in China, units well over 1,000 square feet in towering apartment complexes in upscale neighborhoods have sold out rapidly.
Meanwhile, the OECD’s affordable housing database shows that in the U.S., homeownership remains at 65% as real estate becomes increasingly difficult to buy and college graduates are often stuck with tuition loans. In other Western countries, many people feel resigned to living as renters for the rest of their lives, with little hope of following in the footsteps of their parents or grandparents and climbing the property ladder.
However, like other real estate markets, the boom in China’s real estate market did not last forever.
During the economic boom, many developers racked up huge debts, and an oversupply of housing led to entire ghost neighborhoods and empty projects all over the place. The problem was compounded by poorly managed local governments, eager to push numbers and exploiting a huge oversupply of concrete and steel.
As a result, the central government took drastic measures in 2020 to rein in the freewheeling real estate sector, which once accounted for 30% of the country’s economic activity.
The move began to curb problematic construction, but it also dealt a huge blow to homeowners who were seeing property prices plummet. Many major developers defaulted or went bankrupt, leaving buyers with unfinished or delayed apartments.
Debt-laden real estate giant Evergrande, once China’s largest developer, was ordered into liquidation by a Hong Kong court in 2024. Other major real estate developers are also showing signs of trouble, including Country Garden, which recently fended off a windfall petition, and Vanke, which is awaiting an $11.6 billion bailout from local governments.
All of this was compounded by a host of economic uncertainties, from weak domestic consumption to the threat of a historic trade war with the United States, forcing the most eager buyers like Tsai to think twice before entering the market.
“I’m going to buy a home someday, but probably not within a few years. I’m not looking to buy any time soon,” he told CNN.
Five years after the first wave of defaults by property developers, scars remain in the sector.
Although some major cities showed month-on-month improvement, new home prices in March declined at a wider rate nationwide.
China’s leaders have said stabilizing the housing market is on their agenda, but analysts say the central government is preoccupied with promoting technological advances and has no interest in restoring the housing market to its former prominence as an economic driver.
Zhang Xiaoduan, head of business development services for southern and central China at real estate firm Cushman & Wakefield, said there is a disconnect between what authorities want and the reality on the ground.
“There is still a gap between these signals and a real recovery in purchasing power across the market and a rapid recovery due to demand,” he said.
Despite the constant threat of tariffs from the United States, China achieved a historic $1.2 trillion trade surplus last year and achieved its 5% economic growth target. But analysts say export success has little to do with the general public, turning it into purchasing power that could reverse the ongoing real estate recession.
Mandy Fenn, a rental manager who prefers to use a pseudonym for fear of being seen as criticizing authorities, said the stimulus packages being provided by the government have not been able to offset people’s fears about the uncertain economic outlook.
“Real estate prices are low, but the economy is not doing well,” said a 30-year-old photographer who lives with her husband and daughter in the southwestern city of Kunming.
“It’s not that people don’t want to buy,” she says. “But if everyone is suffering from unstable incomes and not making much, no one will dare to take out a mortgage.”
China’s housing crisis has shown generations of homeowners that real estate investing can also be risky.
“People are recognizing that there could be a period of turbulence in the market, so they’re becoming more cautious about investment-driven purchases,” said Cushman & Wakefield’s Chan.
Additionally, the current generation thinks about homeownership differently than their parents and grandparents.
Their mother, Zoe Zhang, 35, told CNN that she would “probably not” buy a house for her children, even though she is relying on her parents’ help to buy her current apartment in Beijing.
“The Chinese market is gradually becoming more similar to Western countries, and rentals may become mainstream in the future,” said the public relations manager.
