Hangzhou: Reducing the housing burden key to boosting births

On July 20, the central authorities unveiled a policy document aimed at reducing childrearing and education costs and build a “fertility-friendly society” as a follow-up move to the May 31 policy decision of allowing all couples to have three children. Less than six years ago, in October 2015, China relaxed its more than three-decade-old stringent family planning policy, allowing all couples to have two children.

This swift change in the family planning policy should be seen against the backdrop of China’s rapidly aging population and low birth rate.

Many experts say China’s socioeconomic environment, especially in urban areas, doesn’t encourage couples to have even two, let alone three, children. In particular high housing prices and the instability of the rental housing sector are detrimental to young couples’ plans to have children-or even marry. Thus, to create a “fertility-friendly environment” for couples, building a “fertility-friendly” housing sector is a prerequisite.

Houses used to be allocated for free and as non-tradable welfare goods to urban residents in China during the planned economy era, from 1949 to 1977. But severe housing shortage and deteriorating housing conditions under the welfare housing system prompted the government to gradually commercialize the housing sector from the 1980s.

The 1998 reform abolished the welfare urban housing system. Since then, the housing sector in Chinese cities has expanded exponentially. But as housing supply and prices are largely driven by profit, many people cannot afford to buy a house.

Since 2017 the government, following the principle that houses are meant for living in, not for speculation, has implemented several rounds of regulations to curb speculation in the housing and land markets. Yet housing prices in cities have kept increasing.

Most of previous generations’ urban residents acquired houses before the housing reform or in the early stages of the reform. And the prices of their houses have increased manyfold thanks to the housing market boom. But the rising housing prices that have increased the value of the older residents’ property have now become roadblocks for younger couples to buy a house and raise a family.

So to build a “fertility-friendly society”, the authorities first need to allocate housing on the basis of people’s need, not on the demand of capital.

First, the authorities should adopt more stringent measures to curb speculation in the housing market. Many people still purchase houses in cities as investment. Such investors, many of them with deep pockets, easily crowd out young couples desperately seeking to buy a house. The authorities should therefore impose strict housing purchase restrictions-for example, no apartments should be sold to a buyer who already owns two housing units, and people buying a second house should be asked to make a down payment of at least 70 percent of the total price.

Second, when it comes to housing purchase, the government should give priority to couples with more than one child. Many big cities have introduced a lottery system to ensure fair allocation of new housing units under the price ceiling regulation. And several cities including Shanghai, Shenzhen and Hangzhou have adopted a point-based system to accord priority to certain groups such as those without a home or with a longer tax-paying history, in the allocation of housing units.

Yet no city has given priority to couples with, say, two children in the housing market. However, to encourage couples to have more children, it is necessary to give preference to people with more children in housing allocation.

Third, the authorities also need to give priority to couples with more than one child in the allocation of subsidized, affordable housing, while also helping reduce the housing costs. The government has invested heavily to expand the subsidized, affordable housing system, but so far most of such affordable housing is targeted at low-income urban households. Which means a large percentage of the young couples can neither purchase an apartment in the open market nor avail of the traditional subsidized housing system. No wonder they are referred to as “the sandwich class”.

Fortunately, on July 2 the State Council, China’s Cabinet, issued a policy document for expeditiously developing the affordable rental housing sector, in order to provide accommodation for a large percentage of the new urban residents regardless of their incomes.

And fourth, the authorities should also take concrete measures to make housing affordable for young people. Since young urban residents generally have high job mobility, they often tend to flock to big cities and choose to live in rental housing in the short term, in order to save money. Local governments therefore should take appropriate measures to check the increase in rents, strictly regulate the rental housing market, and ensure everyone has equal access to local public services including children’s education.

Also, community governance, neighborhood development and urban redevelopment should help create a children-friendly environment. Since the housing and population policies are part of the social housing policy, they should be integrated to realize the common goal of raising China’s fertility rate. And since the population policy is also aimed at raising the fertility rate, the housing policy should be aimed at creating a “fertility-friendly” environment for couples.