China’s real estate obsession hits consumption
China’s obsession with getting on the property ladder is taking its toll on consumption, as inflated real estate prices burden homeowners with hefty mortgage repayments, leaving them little disposable income.
In a country where home ownership carries immense cultural significance, especially in the capital, the need to purchase a property separates those who spend freely from those who keep their purse strings tight.
If a Beijing-born man’s parents own a condominium, they often pass it on to their son when he marries. But those who have moved to the capital from elsewhere must buy one themselves. When two people from outside Beijing marry, they often scrape together money from relatives to buy property, a real estate broker here says.
This effort owes largely to a deep-rooted view that a man without his own home is unfit to marry. With men of marrying age outnumbering women by a wide margin, women can afford to maintain those high standards for partners. Renting rather than owning housing also makes it tougher to send children to good schools.
Condos cost just as much in Beijing as in Tokyo, if not more. A Chinese state employee who bought a condo two years ago for the equivalent of 60 million yen ($565,000 at current rates) laments that the mortgage payments allow for little personal spending.