70 percent of Chinese millennials are now said to own their home - leading global home ownership

[Shotgunner51]

But the high prices aren't fake, right? Therefore for 70% of millennials to own their property, their salary must be multiple times of what the official statistics show. If property prices is almost as high or even higher than other developed cities, then the millennials must have an nominal income higher than other developed countries?

Perhaps I should simplify my previous reply. Reasons IMO, other than paid up or transferred by parents, are these:

1. Those self-employed, free-lancers, proprietors or SME (small-medium) entrepreneurs, their income could be a lot higher than market salaries.
2. Many professions have reward schemes in which incentives play a far bigger role than monthly salaries, e.g. commissions, bonuses, stock options (this could be very big when stocks get listed). Note on stock options, China doesn't tax on capital gain, only small amount of stamp duty.
   
3. Tax planning. Employers may work in tandem with employees to lower reported salaries, this is very common in SME.
   
4. State-private ownership programs (分房政策) allow many to buy properties at below-the-market prices.
5. Redevelopment compensation (拆迁补偿). Due to rise of land price, redevelopment compensation often comprise of more than one properties to each household.
   
6. Grey income.

 

[TaiShang]

Major Chinese property developers see surging sales in Q1
Xinhua, April 9, 2017

China's major property developers saw sales surge in the first quarter despite government controls on the real estate market, Shanghai Securities News reported Saturday.

Twenty-one listed developers recorded 621.6 billion yuan ($90.1 billion) of combined sales in real estate contracts signed in Q1, up 69 percent year on year, the newspaper reported.

China Vanke, the country's leading residential developer, posted a 99.7-percent jump in sales, which totaled 150.3 billion yuan in the first quarter.

Four companies saw their sales increase by more than 100 percent year on year. They included Longfor Properties, a Hong Kong-listed firm, whose sales soared 218 percent year on year to 43 billion yuan.

Major developers with good reputations gained an advantage over smaller companies amid recent government curbs on the property sector, while some developers might have accelerated sales to lock in profits before the market cools later this year as expected, the newspaper said.

The central government is trying to rein housing prices in major cities where huge demand and limited supply have pushed prices to record highs.

Major cities are taking fresh measures including increased deposits for second-home buyers, adding to the slew of steps taken since October in dozens of cities to prevent home prices from rising out of control.

 

[Shotgunner51]

Chinese millennials aren't indebted with student loans. Chinese parents save and spend as much as it takes to send their children to college. In addition, Chinese culture shuns borrowing, student loans are unheard of and unavailable. This is very different from other nations, say in American millennial, those in their 20s are overwhelmed with student loans, which amount to some $1.3 trillion. More than seven million student borrowers are in default and millions are still struggling to repay their loans.

As pointed out previously, on factor of high home ownership among Chinese millennials is absence of student loans. Recently there is an article on student loans - https://www.ft.com/content/a272ee4c-1b83-11e7-bcac-6d03d067f81f - and explains the linkage. Extracts:

• Over the past 10 years the amount of student loan debt in the US has grown by 170 per cent, to a whopping $1.4tn — more than car loans, or credit card debt.
• In America, 44m people have student debt. Eight million of those borrowers are in default. That’s a default rate which is still higher than pre-crisis levels
• While the headline consumer price index is 2.7 per cent, between 2016 and 2017 published tuition and fee prices rose by 9 per cent at four-year state institutions, and 13 per cent at posher private colleges. This not only leads to excess borrowing on the part of universities — a number of them are caught up in dicey bond deals like the sort that sunk the city of Detroit — but higher tuition for students. The average debt load individual graduates carry is up 70 per cent over the past decade, to about $34,000.
• Growing student debt has been linked to everything from decreased rates of first time home ownership, to higher rental prices, to lower purchases of white goods and all the things that people buy to fill homes. Given their debt loads, one wonder how much of the “rent not buy” spending habits of Millennials are a matter of choice. But there are even more worrisome links between high student debt loads and health issues like depression, and marital failures. The whole thing is compounded by the fact that a large chunk of those holding massive debt do not end up with degrees, having had to drop out from the stress of trying to study, work, and pay back massive loans at the same time. That means they will never even get the income boost that a college degree still provides — creating a snowball cycle of downward mobility in the country’s most vulnerable populations.
• How did US get here? Extreme politics played a role. In the US, the Koch Brothers/Grover Norquist tax revolt camp of the Republican party has been waging a state by state war on public university funding for years now: states today provide about $2,000 less in higher education funding per student than before 2008, the lowest rate in 30 years. Meanwhile, the subprime crisis cut the ability of parents to use home equity loans to pay for their children’s education (previously a common practice). This left the bulk of the burden to students, at a time when the unemployment rates for young people of all skill levels were rising.
• The trend is not limited to the US, of course. In the UK and beyond, completely free post-secondary education is a thing of the past. Beleaguered governments are pushing more and more of the responsibility for the things that make a person middle class — education, healthcare and pension — on to individuals. Look closely at the for-profit sector, where default rates are more than double those at average private colleges. These institutions receive federal subsidies but typically spend a minuscule part of their budgets on instruction; in the US, nearly 50 per cent goes on marketing to new students. It looks all too much like an educational Ponzi scheme.
• In an eerie echo of the housing crisis, debt is already flowing out of the private sector, and into the public. Before 2007, most student loans were underwritten by banks or other private sector financial institutions. Today, 90 per cent of new loans originate with the Department of Education.

 

[gambit]

Home ownership is higher in Singapore and China than in the US btw.

Single family homes ? Am not talking about an apartment 'home'.

I work with a lot of Indian engineers. To a man, and a few women, if they did not have to save money and send back to India and if their goals was to at least be a US residence, the first thing each would be is a home owner. Same thing with the Chinese engineers, be it from mainland China, Taiwan, or Singapore. A few who decided and managed to get their US green cards, they did exactly just that -- bought a house on its own plot of land.

Owning a house is not easy. Right now, my front yard has dandelions so some time next week I will have to put 'Weed-n-Feed' into the seed spreader and run it. Do you know what I am talking about ? A house is larger than an apartment so heating/cooling will cost more. When the plumbing clogs, it is your responsibility to fix it. No landlords to call and complain. So overall, a house costs more than an apartment rent. But with a Chinese friend of mine whose wife is a stay at home mother said that if she has to work part time to help maintain and keep the house -- she would.

Nowhere have I said 'high density' living is miserable, so please do not virtually put words into my virtual mouth.

 

[Shotgunner51]

@Mista @gambit
Please post home ownership related posts here, thanks.

 

[Mista]

Nowhere have I said 'high density' living is miserable, so please do not virtually put words into my virtual mouth.

I used 'as miserable', not 'miserable'. There's a difference. It's used as a comparison to living in a house which you claimed.

Look, you keep on using your personal anecdotes to prove your point. I also know of Americans, Australians and even Europeans who prefer the city lifestyle and the convenience in Singapore and other Asian cities such as Tokyo and HK provides. Yes, Hong Kong the uber high density city where property prices is ridiculous. But do I take my anecdotes as absolute and therefore come to the conclusion that high density living is always more desirable than low density living? No, because I'm sane enough to know that these are selective cases and isn't representative of the whole population. Logic also tells me that it all boils down to one's preferences of lifestyle.

 

[gambit]

I used 'as miserable', not 'miserable'. There's a difference. It's used as a comparison to living in a house which you claimed.

And I said nothing of the kind. I even admitted that I missed city life. Did you not see that statement ?

Look, you keep on using your personal anecdotes to prove your point.

It is not anecdotal.

http://time.com/3925865/america-home-real-estate-china/

http://www.inman.com/2015/03/04/start-preparing-for-chinese-homebuyers-and-real-estate-investors/

Chinese immigrants are drawn to single-family houses. For many of them, the idea of a U.S. home is a single-family house with a yard and private garage. These homes are rare in China and are often reserved for the ultrawealthy.

http://www.theglobeandmail.com/real...er-homes-just-outsidebeijing/article32166336/

“The developer claims to have traveled to Canada more than 10 times to learn more about North American homes and lifestyles,” he said in an email. “They hired Canadian architects to design the whole community and claim to have planted 10,000 trees to give it a suitably leafy environment.”

https://www.besmartee.com/blog/chinese-real-estate-buyers-in-california

Chinese nationals emigrating to the U.S. are drawn to suburban single-family homes with yards and garages. There's a limited supply of these homes in China, and most are only available to the wealthy. Those who aren't purchasing mansions and single-family homes prefer new condominiums in urban areas.

What is reserved for the ultrawealthy in China is middle class to Americans and Canadians.

It is not so much the price as it is the house itself. US realtors talks to each other. They noticed the trend.

 

[Mista]

And I said nothing of the kind. I even admitted that I missed city life. Did you not see that statement ?


It is not anecdotal.

http://time.com/3925865/america-home-real-estate-china/

http://www.inman.com/2015/03/04/start-preparing-for-chinese-homebuyers-and-real-estate-investors/


http://www.theglobeandmail.com/real...er-homes-just-outsidebeijing/article32166336/


https://www.besmartee.com/blog/chinese-real-estate-buyers-in-california

What is reserved for the ultrawealthy in China is middle class to Americans and Canadians.

It is not so much the price as it is the house itself. US realtors talks to each other. They noticed the trend.

In Chinese cities only the wealthy buy houses. However these houses are often in proximity to the city, quite unlike the houses which are in the suburbs like the US or Australia. Therefore they have the best of both world, a large house which is fairly accessible to amenities.

Houses in the suburbs exists too for the middle class, such as in Japan and Malaysia. They are probably even cheaper than houses in the US.

 

[Star Expedition]

Now people can begin to understand communism.

 

[shadows888]

Single family homes ? Am not talking about an apartment 'home'.

I work with a lot of Indian engineers. To a man, and a few women, if they did not have to save money and send back to India and if their goals was to at least be a US residence, the first thing each would be is a home owner. Same thing with the Chinese engineers, be it from mainland China, Taiwan, or Singapore. A few who decided and managed to get their US green cards, they did exactly just that -- bought a house on its own plot of land.

Owning a house is not easy. Right now, my front yard has dandelions so some time next week I will have to put 'Weed-n-Feed' into the seed spreader and run it. Do you know what I am talking about ? A house is larger than an apartment so heating/cooling will cost more. When the plumbing clogs, it is your responsibility to fix it. No landlords to call and complain. So overall, a house costs more than an apartment rent. But with a Chinese friend of mine whose wife is a stay at home mother said that if she has to work part time to help maintain and keep the house -- she would.

Nowhere have I said 'high density' living is miserable, so please do not virtually put words into my virtual mouth.

That's the point of urban living, you don't have to deal with all that other crap and everything else is close by and convientent. When your time can be used more productively to improve skills not now the lawn every other weekend. Your keep using your "preferences" but seeing urbanization rates many would disagree with you.

 

[Dungeness]

Single family homes ? Am not talking about an apartment 'home'.

I work with a lot of Indian engineers. To a man, and a few women, if they did not have to save money and send back to India and if their goals was to at least be a US residence, the first thing each would be is a home owner. Same thing with the Chinese engineers, be it from mainland China, Taiwan, or Singapore. A few who decided and managed to get their US green cards, they did exactly just that -- bought a house on its own plot of land.

Owning a house is not easy. Right now, my front yard has dandelions so some time next week I will have to put 'Weed-n-Feed' into the seed spreader and run it. Do you know what I am talking about ? A house is larger than an apartment so heating/cooling will cost more. When the plumbing clogs, it is your responsibility to fix it. No landlords to call and complain. So overall, a house costs more than an apartment rent. But with a Chinese friend of mine whose wife is a stay at home mother said that if she has to work part time to help maintain and keep the house -- she would.

Nowhere have I said 'high density' living is miserable, so please do not virtually put words into my virtual mouth.

To defend the miserable home ownership rate in the US, you are willing to go any length, including redefining "HOME". You seem to conveniently forget many Americans call their condos HOME as well.

For me, the only advantage owning a home with a huge backyard is you can grow vegetables that you can't buy in the supermarkets. Admit it, it is a backbreaking job to keep your "simple family home" in accordance with HOA's rules. People do lawn-mowing every couple of weeks, not because they love to, but because they have to.

 

[gambit]

To defend the miserable home ownership rate in the US, you are willing to go any length, including redefining "HOME". You seem to conveniently forget many Americans call their condos HOME as well.

For me, the only advantage owning a home with a huge backyard is you can grow vegetables that you can't buy in the supermarkets. Admit it, it is a backbreaking job to keep your "simple family home" in accordance with HOA's rules. People do lawn-mowing every couple of weeks, not because they love to, but because they have to.

I redefined nothing. You can call a cave a 'home' if you like. What I did was said which STYLE of home is more desirable and what your fellow Chinese -- in China and immigrants to the US -- showed is that a standalone home is the most desirable style.

By the way, I do not live in an HOA.

 

[gambit]

In Chinese cities only the wealthy buy houses. However these houses are often in proximity to the city, quite unlike the houses which are in the suburbs like the US or Australia. Therefore they have the best of both world, a large house which is fairly accessible to amenities.

Houses in the suburbs exists too for the middle class, such as in Japan and Malaysia. They are probably even cheaper than houses in the US.

I can still remember the first day of home ownership for me many yrs ago. My G/F was with me but since the house is in my name, I will speak in the first person.

After the deal was closed, I started moving in. The laborious day was not made for thinking. Just simply moving one box after another. The utility company was upgrading the meter so the house had no electricity until the next day, so that night, we had candle light dinner by necessity, and the dinner was pizza takeout and beers. We slept on an air mattress in the family room. When I woke up the next morning, it was not so much the thought 'This is my house.' but rather it was a feeling that this is my house. I woke up amidst cardboard boxes, on an air mattress mere inches of the floor, but I was happy in a way I have never felt before. We all owns 'stuff' but up to a house everything we owns depreciates over time. That morning, I woke up knowing I own something that have an enduring value and desirable by everyone.

I chose carefully where I live. Actually, the location was more important than the house itself. Where I live, ten minutes on road and ten minutes off road, and I will be among horse trails. Go ten minutes deeper into the hills and I can shoot my pistol and rifle all day if I wanted to. That was where we took our Chinese Intel engineers guests, now friends. None of them ever rode horses before. One guy got his foot stepped on by a pony and he was surprised at how heavy the animal was. Now he was about to get on the back of a full size stallion. At the end of the day, all of them had sore butts from riding horses and sore right shoulders from rifle recoils, but all of them were happy to experience something each knew they would most likely never experience again. To a man and woman, all of our Chinese friends said that if they could have something like American style houses in China, they would.

If you take a plot of land whose square area is large enough to build two houses, and you give permission to build, do you really believe that two people -- Chinese or not -- would build two apartments sharing a wall ? Not likely. Maybe, but not likely. Even if there is just one meter of space between the two houses, the two Chinese would build two standalone houses.

Owning your own home changes your outlook and nothing is better than owning a standalone house. If you can afford such a house near the city with all of its amenities -- great. If not, you are not going to anguish over a little more distance to get to the market or the shopping malls. It depends on what kind of lifestyle you want. I chose to be closer to the land after decades of living in the cities.

 

[Mista]

If you can afford such a house near the city with all of its amenities -- great. If not, you are not going to anguish over a little more distance to get to the market or the shopping malls. It depends on what kind of lifestyle you want. I chose to be closer to the land after decades of living in the cities.

Finally we came to the same consensus that it all boils down to one's preference for their lifestyle, which is what I'm arguing about all along.

What I realize is that people usually yearn for a different lifestyle that they grew up with. A big city boy yearning for rural lifestyle with nature, or a rural boy admiring a big city's vibrancy and convenience.

 

[TaiShang]

Second homes, second thoughts
By Wu Yiyao in Shanghai | China Daily | Updated: 2017-04-24

Property agents said purchase restrictions not only squeeze out speculative demand but help some homebuyers to reduce financial risks, making them more cautious and prudent. [Photo by Kuang Linhua/For China Daily]

Homeowners who wish to upgrade to more spacious or better-located properties are among those most impacted by the recent tightening of China's home purchase rules.

Such prospective homebuyers are required to make higher down payments in key cities now.

Property agents said purchase restrictions not only squeeze out speculative demand but help some homebuyers to reduce financial risks, making them more cautious and prudent.

Ma Chengbing, an agent with Beijing-based Zhongzheng Realty Agency, said many prospective buyers of second homes, particularly young parents, eye better public resources and conveniences to enjoy a better quality of life.

So, apartments in, say, central districts of the capital typically enjoy hot demand, given their proximity to renowned hospitals, famous schools, shopping areas, parks, lawns and riverside walks.

For their part, retirees and those on the verge of retirement also prefer such areas, in order to live with their children and grandchildren－more so if their children are young parents or are about to become parents.

"But now, for many buyers, affordability is the only factor for decision-making. Some of those upgrading are dropping their plan simply because they can't afford to make higher down payment. Also, some buyers who wished to sell their first home and then buy a second one are hesitant because they are not sure if the family income will be stable and steady enough to cover the monthly installments related to a more spacious home," said Ma.

Sun Ailian, 56, a retired high school teacher in Shanghai's Baoshan district, said she is reconsidering her plan to buy a second home in the city.

"In the past when I made plans to buy a new home, I'd focus on just buying one. But now, I need to really think about affordability; the financial burden on me would be immense. My children need to ponder if it would be worthwhile to shoulder the burden.

"Some of my friends bought new homes, but cut down on spending on other items. They don't travel or dine out any more like in the past, simply because they have to pay installment every month, up to 50 percent of their household income.

"I don't want to be in such a situation. More subway lines are expected to run near my current home. More shopping malls and hospitals have opened in my neighborhood of late. So, there may not be any urgent need to move to a central district."

Supplies of higher-end homes are unlikely to increase quickly in key cities in the short term, but more public resources offered at sub-prime locations are likely to help meet more residents' demands for better housing and living conditions, said a research note from Beijing-based B. A. Consulting.

"Homebuyers may evaluate a property in the context of urban planning and economic growth of a given region. If the region has a long-term plan for upgrading its public facilities and has strong potential for economic growth, the property will actually be 'upgraded' in alignment with the region's development," said the research note.