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In a bold move reflecting the challenges faced by homeowners in the recent economic climate, 28-year-old Linda Chen and her husband recently sold their 70 square meters (753 sq ft) home in Hangzhou at a discount of approximately 300,000 yuan (U.S.$41,963). The couple made the difficult decision to part with their property, stating the accelerating financial strain of monthly mortgage payments, even after the efforts made by the government to alleviate the burden through mortgage ratio cuts.
Having diligently paid around 9,000 yuan in monthly mortgage payments for several years, Linda Chen found herself in a situation where the couple was still required to pay more than 7,000 yuan per month, despite the government’s intervention. The persistent financial stress compelled the couple to evaluate their options and ultimately led to the decision to sell their home.
“It was not an easy decision to make, but the house was a huge burden,” shared Linda Chen. “I know we needed to sell no matter what the price.” Despite the authorities introducing several mortgage ratio cuts in the previous year, some homeowners continue to grapple with the high costs associated with homeownership.
Local real estate experts suggest that the case of Linda Chen is not isolated, as several more homeowners are evaluating their financial situations amid rising living costs. Chen also asserted that renting was more flexible and suitable for them and they wouldn’t think about buying a home for at least the next five years. Besides them, there is a growing number of people who would prefer to rent than buy amid the downturn in the economy of China.
As noted by the end of last year there were about 290 million tenants in China and the gross value of tenants witnessed a growth of over 2 trillion yuan, according to an analysis by a Chinese property think tank, Beike Research Institute. However, as per the CRIC (China Real Estate Information Corporation), the value of the rental homes market is anticipated to witness a growth of 2 per cent to 1.8 trillion yuan by the year 2026 from an estimated 1.7 trillion yuan the previous year.
The agency stated that the period that tenants had been living on rent for had increased as they no longer see rented properties as just temporary homes, instead they see renting as more like settling for a longer term. The authorities rolled out a policy in July 2021 that eventually boosted the development of subsidized rental housing. This policy eventually helped in steadily increasing supply year by year.
Li Jianlin, the research director in CRIC’s long-lease department asserted that the amount of rents paid went down overall last year, looking at the performance of 55 cities [tracked by CRIC]. A report by 58 Anjuke Real Estate Research Institute last month revealed that indicators reflecting the supply and demand for rented property grew for medium and low-priced units and declined for high-priced units, particularly in 40 cities as tracked by Anjuke. The report also clarified that overall the market showed a lower rent price, reflecting the weaker affordability among tenants.
As the government continues its efforts to strike a balance between stabilizing the property market and ensuring affordable housing, the story of Linda Chen and her husband sheds light on the complex decisions facing homeowners in the current economic landscape.