Harbin, a northeastern city in China, has seen rapid urban development in recent years, with high-rise apartments standing alongside commercial hubs and historic landmarks. However, for many property owners like 55-year-old driver Zhao Yuchun, the changing landscape serves as a reminder of missed opportunities and shifting economic realities.
Zhao, who purchased two flats in 2018, once saw his investment as a gateway to financial security. At the time, property values were soaring, and speculation was commonplace. “If I sold my flats in 2019, I could have made double the price. I bought them at US$560 per square meter and could have sold at US$1,120,” he recalled. But the situation has changed dramatically. “Now that’s not the case.”
The property market downturn has shattered long-held beliefs about housing as an infallible investment. Once a primary vehicle for wealth accumulation, real estate now presents risks that many Chinese investors had never seriously considered. During the housing boom that began two decades ago, over half of China’s wealth creation stemmed from rising property values. However, after peaking in 2021, home prices have plummeted to mid-2019 levels, leaving many investors, like Zhao, with assets worth far less than expected.
For decades, property was considered a fail-safe investment in China, with values consistently appreciating. With real estate comprising roughly 70% of household wealth, the decline in home prices has delivered a significant financial shock, eroding consumer confidence and purchasing power.
Beyond personal finance, housing also plays a deep cultural role in China. Observers note that home ownership is often tied to intergenerational wealth and social stability. It is a crucial factor in marriage prospects, as many families view home ownership as a prerequisite for starting a family.
According to Mr. Qu Yunlong, a branch manager at Jiaoyang Real Estate, many young homebuyers rely on their parents for financial assistance. “Some people don’t have a strong financial foundation, especially those who have just gotten married and need to buy a home,” he said. However, the market downturn has forced many potential buyers to reassess their priorities. “They now have to consider and hesitate when looking at mortgage payments and whether their salaries are sufficient.”
Zhou Na, a research fellow at the National University of Singapore’s East Asia Institute, noted that younger generations are becoming increasingly burdened by high housing costs coupled with stagnant wages. “This has led them to question the traditional narrative of home ownership—not just as an investment, but as a key to marriage, education, and intergenerational wealth. Particularly now, with housing prices continuing to decline after the pandemic, real estate is no longer seen as a secure investment.”
Associate Professor Laura Wu from Nanyang Technological University’s School of Social Sciences pointed out that perspectives on housing investment are diverging between generations. Those who witnessed the housing boom in the 1970s and 80s had a vastly different experience from those born in the 1990s and 2000s. “Younger generations have seen their predecessors suffer steep losses, leading them to make different investment decisions,” she said.
As a result, many young Chinese are moving away from the homeownership mindset that was once deeply ingrained in the country’s financial culture. Some are embracing alternative housing arrangements, including long-term renting, as they prioritize flexibility over ownership.
“Renting is actually a very good option now. I don’t think it’s necessary to be fixated on buying a house,” a young Harbin resident said. “Some people may see owning a home as a form of persistence, but I think letting go of that obsession and experiencing other things might actually be better.”
Another young resident echoed similar sentiments, explaining that purchasing a house is now less about investment and more about a sense of belonging. “Having a home feels warm—it’s about enjoying a better living environment rather than making money from it.”
These shifting attitudes pose challenges for Chinese authorities, who have been working to stabilize the real estate sector. Late last year, the housing ministry introduced several policies aimed at increasing demand and restoring market confidence. These included an expansion of government-subsidized housing to support young buyers.
However, Ms. Wu noted that broader economic trends—such as slowing income and population growth—suggest that housing demand may not return to previous levels. “Both income growth rates and population growth rates are lower than in the past four decades. There is no reason to expect another housing boom in the near future.”
Despite the overall market slowdown, certain segments are showing resilience. Residential property sales in China’s first-tier cities continued to climb in January, demonstrating stronger demand compared to second- and third-tier cities.
Lower-tier cities, struggling to keep up, are exploring new strategies to attract buyers. Many are rolling out incentives, such as free metro rides or employment opportunities, to lure potential homeowners from other regions. One notable initiative is a housing trade-in program in Wuxi, a city west of Shanghai.
Since October, state-owned Liangxi Urban Development Group has expanded a trade-in scheme allowing homeowners in neighboring cities like Nanjing and Shanghai to swap old flats for new ones in Wuxi. Depending on the condition of their current property, owners can exchange one or multiple units or consolidate several flats into a single upgraded home.
Senior property consultant Yi Yayun from LC Fine View Real Estate noted that about 30% of interested buyers come from neighboring cities like Nanjing, Shanghai, Suzhou, and Changzhou. “The trade-in program provides an opportunity for homeowners to exchange outdated properties—some over 40 years old—for modern residences that better suit their needs.”
Housing trade-in schemes are not new, but Wuxi’s cross-city model represents a pioneering approach. The Chinese government has encouraged local authorities to craft their own solutions to address the housing crisis, and many see Wuxi’s program as a model that could be adopted in other cities.
Local governments, particularly in tier-two and tier-three cities, are competing aggressively for new residents. Some are bundling job offers with home purchases, while others are offering extended free metro passes as a perk. “Tier-two and tier-three cities are in competition to attract younger, financially capable populations,” Wu explained. “These governments need a labor force, tax revenue, and a growing consumer base to sustain their economies.”
As younger generations move away from the traditional homeownership model, China’s real estate sector is undergoing a fundamental transformation. The belief that property investment guarantees wealth accumulation is fading, replaced by a more cautious, pragmatic approach. While some cities are adapting by introducing creative incentives, the broader market faces long-term structural changes.
For many, the days of speculative property investment are over. Whether this shift will stabilize China’s housing market or lead to further economic challenges remains to be seen. But one thing is clear
