Yahoo Finance China's millennials search for ways to pool savings as property in Beijing, Shanghai soars even further out of reach
Less that a fifth of Chinese millennials " or those born after 1990 " have been able to get on the housing ladder without the support of their extended families, focusing a spotlight on the nation's growing housing crisis where young adults are scrambling to pool together funds to meet deposit requirements.
In recent times the practise of pooling savings from family, even among unmarried couples, has become so prevalent that some prospective homebuyers feel disadvantaged when single.
According to a survey released Monday by Ke.com, China's largest housing e-commerce site, just 17.8 per cent of millennials have been able to purchase a home without having to rely on financial backing from their parents.
Tan Jinqiao, a 27-year-old product manager for a tech company in Beijing, faces the dilemma of buying a flat in his hometown where prices are cheaper or saving in the hope of one day buying in Beijing where he currently lives.
Tan said he and his girlfriend have talked about pooling their savings as well as drawing on family support.
He says the prohibitively high cost of housing is a concern, but he also remains wary of the loss of personal freedom, including the ability to quit his job and travel or study abroad, that comes with a heavy mortgage burden.
"Initially I was reluctant to be house poor, sacrificing so many freedoms just for an unmovable flat. But seeing the home price jumping, I decided to save for a home," Tan said.
Tan said unaffordable housing is "almost the only problem" that occupies his thoughts daily, with life in Beijing being relatively comfortable, as he and his girlfriend earn a combined monthly income of 30,000 yuan (US$4,453). The couple also drive a German car and occasionally travel abroad for holiday.
Despite the higher cost, Tan believes a home purchase in Beijing makes greater sense as it fits with his career plan and there is a better chance of capital appreciation.
However, unless the affordability issue is addressed, the ranks of young renters in major mainland cities could swell in coming years. Although no official nationwide census is available, rental services company Ziroom estimates the ranks of young renters could swell to 260 million in 2030, up from the current size which the firm estimates at 190 million.
An average flat in Beijing or Shanghai costs 4.32 million yuan (US$640,000), compared to 1.51 million yuan in smaller cities, according to the Ke.com report, which tracked 330,000 transactions in 23 cities.
In Shanghai, the average home prices has soared 46.4 per cent over the past four years and is more than 40 times the average annual income of local residents.
"The prevalent pooling means single persons in China are discriminated against in the property market because they can't find partners to pool with," said Joyce Wang, a 28-year-old Hangzhou resident.
An average flat in Beijing or Shanghai costs 4.32 million yuan (US$640,000), compared with just 1.51 million yuan in smaller cities, according to the Ke.com report, which tracked 330,000 transactions in 23 cities.
In Shanghai, the average home prices has soared 46.4 per cent over the past four years and is more than 40 times the average annual income of local residents.
Yin Chunlei, 28, is among millennials who recently left Beijing because of the high cost of living. She and her husband moved to Hangzhou in early 2018 and bought a flat for 1.8 million yuan. The couple were married before the home draw took place to bolster their chances over single candidates.
"It is a big relief to settle this," Yin said. "As an occupier instead of a speculator, I really don't want the price to spike."
Potential homebuyers visit the display centre of the Jingdong central business district project in Beijing. Photo: Yangpeng Zheng
The Ke.com report found while people born in 1991 and 1992 made up 60 per cent of all transactions among millennials. They also generally favoured flats smaller than 80 sq m, a layout not consider large by mainland standards. Younger buyers born after 1997 tended to prefer spacious flats larger than 90 sq m. The report attributed the uptick in buying by the post-1997 group to financial support from their parents.
In the search for cheaper prices, Millennials were active in peripheral cities, accounting for 52.5 per cent of home purchases in Xian, a second-tier city where prices are roughly a third of the level in Beijing, according to the Ke.com report. Most mainlanders born since 1990 don't own homes in the cities in which they live, as they are their savings to buy in cheaper areas, according to the report. Millennials were found to account for 22.7 per cent of home purchases in Shanghai.
Tan said he was nearing the eligibility criteria to qualify as a local buyer in Beijing, having paid into local social security funds for nearly five years.
"But I have become more anxious," Tan said.
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