Subsidizing Citizens to "Buy Houses," Says Chinese Local Government

New Apartments in 3rd-4th Ring Urban Areas Under 90㎡ to Receive 10,000-30,000 Yuan Subsidy
Real Estate Experts Say Past Inventory Clearance Success Difficult to Repeat

[Asia Economy Senior Reporter Cho Young-shin] Local governments in China are encouraging farmers to purchase housing (apartments) by even providing subsidies. It appears that local governments have stepped in to urge farmers to buy homes in order to boost the real estate market.

Photo by Bonghwa Mang Capture

Previously, a senior official in Hunan Province drew criticism within China for urging people to "buy houses."

Chinese media Pengpai reported that some local governments in Jilin Province, Jiangsu Province, Hubei Province, Guizhou Province, Anhui Province, Sichuan Province, and Heilongjiang Province are encouraging farmers to purchase housing. According to Pengpai, these local governments offer preferential policies such as purchase subsidies when farmers buy homes in cities.

In fact, Changchun City in Jilin Province recently announced the "Notice on Additional Subsidy Policy Support for Urban Farmers," which provides a subsidy of 200 yuan per square meter (㎡) when farmers purchase housing in the city. Although conditions apply?such as the apartment being newly built, under 90㎡ in area, and the applicant being a first-time homebuyer without existing property?this effectively amounts to selling homes at a discount.

Pengpai explained that not only Changchun City but also Yanji City and Jilin City have introduced similar real estate stimulus policies targeting farmers.

Pengpai added that the subsidy amount varies depending on the local government, but new apartment subsidies range from a minimum of 10,000 yuan to a maximum of 30,000 yuan.

Chen Xiao, chief analyst at the Chinese real estate data platform Zhujiazaofang, said, "Recently, many local cities have announced apartment purchase encouragement policies targeting farmers," adding, "These subsidies mainly apply to unsold (inventory) units in third- and fourth-tier cities, and they can stimulate demand from farmers who want to own apartments in urban centers."

Pengpai emphasized that in the past, various policies have been implemented to enable farmers to purchase urban apartments. In fact, in 2015, the Central Political Bureau of the Communist Party of China encouraged home purchases to resolve real estate inventory issues and accelerate the urbanization of migrant workers.

Also, in 2016, some local governments in Shanxi Province, Shandong Province, and Gansu Province provided subsidies such as loan interest discounts and reductions or exemptions of various real estate fees. The Agricultural Bank of China sold housing loan products exclusively for farmers. Many farmers purchased apartments with the support of these local governments, which significantly reduced apartment inventory, Pengpai added.

However, there are also criticisms that the current local government housing subsidy policies may not achieve higher results compared to the past.

Jang Bo, director of the 58 Anjuke Real Estate Research Institute, forecasted, "While demand from farmers to buy homes in cities still exists, the effect is expected to be lower than market expectations."