The depressing economics of China’s housing bubble are going viral on the Weibo microblogging platform this week as a series of maps is sparking discussion among the country’ netizens about the unaffordability of homes nationwide.
The maps, which compare and combine average wages and average home prices to produce an unaffordability index map of housing agony. The maps have been passed around since Friday and help signify the dilemma facing China’s government as it struggles to maintain growth while ensuring affordable housing for the population.
By dividing cities into red, green and blue categories for the number of years that an average worker would need to toil – without spending any money – in order to put a downpayment on a house, the anonymously produced maps illustrate the unhappiness of average Chinese with high housing prices.
Watch Out for the Red Zones
In all the housing agony map shows nine cities within red zones of housing agony, including Beijing, where an average wage earner would need to work for 13 years just to raise the down payment for a small apartment. Provided they spent no money on food, water or other necessities during that period.
Eight other cities join the nation’s capital in the red category, including Shanghai, Shenzhen, Hangzhou, Xiamen, Nanjing, Macau, and Hong Kong. To qualify for this highest level of unaffordability, markets need to be priced so high that home buyers would need to save 100% of their earnings for at least nine years to cover the down payment for an 80 square metre home. Downpayments usually are set at a minimum of 30 percent.
Notes at the bottom of the maps indicate that they were drawn up using data from the country’s National Bureau of Statistics, combined with real estate market data from each city.
Western China Most Affordable
In the mid-range of the house price to wage rate comparison, are fifteen cities (noted on the map in green) including Tianjin, Harbin, Qingdao, Wuhan, Kunming, Haikou and Guangzhou. Housing shoppers in the green cities would need to save for from five to eight years to scrounge up enough for a downpayment. All of the cities qualify as second-tier, except for the southern metropolis of Guangzhou, where buyers would only need seven years of savings to put money down on an average home.
The big savings seem to come in western China, where an average person could afford to step onto the housing ladder after fasting for no more than four years. Cities falling into this category are mostly in western China, including Urumqi, Xining, Xi’an, and Chongqing. Shenyang, which has one of the most overbuilt markets in China, as well as Changsha and Shenyang also qualify in this supersaver category.
Concern over public discontent with China’s high housing prices has been one of the primary motivators behind the central government’s determination to rein in housing prices over the past several years. As the country’s slumping real estate sector continues to drag down the overall economy, it will be a challenge for the Xi administration to balance this concern for housing affordability against the need to ensure against a potential hard-landing.