Home Ownership Among Chinese Young Adults

Recently I had the chance to meet with a group of five Chinese students close to my age while visiting Xiamen University. We discussed our backgrounds and I was interested to hear that all five of the students had moved to Xiamen from other parts of China. I learned that all five students owned their own homes in or near Xiamen and many of their friends do as well. This was surprising to hear in a city where $300,000 for a modest one room apartment is normal and the average wage is around $1000 per month. So why is it that all five of these students, and many of their peers, own their own homes?

This is a common trend in China. 90% of Chinese families own their own home. More surprising is that 70% of of Chinese born between 1981 and 1998 are homeowners, nearly double the global average for millennials.

So what are the motivating factors here? Owning a home in China serves a variety of social purposes we are not generally accustomed to in the United States. In China, a home is traditionally a requirement for a young man to be suitable for marriage and, with an increase in gender equality, the same is true for many young women. Chinese parents often move in to their children’s homes in old age which adds further importance to the cause. For these students at Xiamen University, owning property in the province was also a prerequisite for attendance at one of the top universities in the country.

How do they afford the homes? It is common for Chinese parents to purchase homes for their children as they near the age of marriage. The now revoked one-child policy created a generation of only-children who have full support from their parents and extended family. The Chinese also rank as some of the top individual savers in the world, with an average of 30% of income put in savings and 46% of GDP in savings.

So what about the masses of newly built and seemingly vacant apartment buildings we saw all around Xiamen?

In China there are far less opportunities for secure investment like we are accustomed to in the United States. Tight restrictions exist on foreign investing. Government interference, clumsy regulations, and a disconnect from GDP growth, make the Chinese stock market a risky bet. Chinese banks have historically had caps on savings deposit interest rates; until very recently consumers would receive negative returns on savings accounts due to inflation. With no current annual property tax and a massive population, real estate is a hot investment area. Speculators and investors purchase housing with no intent of actually living there. This has reached a point where the majority of large and medium sized cities in China are issuing restrictions on real estate transactions in order to curb the speculator market. With income growth in China increasing an average of 10% annually over the last decade, this cultural practice doesn’t seem to be going anywhere soon.


Campbell Wagner

MBA Candidate 2018

Tulane University – AB Freeman School of Business