“Buying a house is no longer a symbol of success; it has become a burden.” – Zhang Wei, 28, Beijing resident.
Over the last three years, China has experienced a turnaround in its real estate market. If, for decades, the dream of owning a home was considered a fundamental rite of passage for stability and social prestige, it has now become an increasingly insurmountable obstacle for the younger generation. Like so many other phenomena in the country, this change can be attributed to a complex interweaving of economic, cultural and political factors. China’s real estate crisis is not just a question of numbers: it is a crisis of identity, dreams and, above all, expectations.
The Blind Escalation of Prices
To understand what has led young people in China to retreat from the real estate market, we need to look at the figures that mark this transformation. Since the early 2000s, property prices in China’s main cities have risen exponentially. According to the World Bank, between 2011 and 2021, the average price of real estate in major cities grew by more than 150%. Beijing, Shanghai and Shenzhen, once accessible to an expanding middle class, now have prices that exceed those of many Western capitals.
An 80-square-meter apartment in Beijing, for example, now costs around 3 million yuan (approximately 400,000 dollars). Even with government financing rates, the conditions for buying have become practically impossible for most young adults. Many young people who started their careers in promising positions face a simple dilemma: either buy a house, which would mean going into debt for decades, or continue to live on rent, with no prospect of anything more stable.
At the same time, salaries, although they have also risen, have not kept pace with the dizzying pace of real estate appreciation. The consequence is a brutal distortion between income and property prices. For Zhang Wei, as for thousands of other young people, the reality of trying to buy a property has become an almost impossible task. “I’ve even tried looking for an apartment, but the price is so absurd that I can’t even imagine a future with it. My generation will never be able to buy a house here,” he laments.
In 2018, a survey by the China Household Finance Survey revealed that 77% of young adults in large cities such as Beijing and Shanghai considered buying a house to be an essential goal for achieving stability, but this figure has fallen dramatically in recent years. Today, less than 40% of young people believe that owning a home is a priority.
The Default Crisis: The Collapse of the Real Estate Giants
As prices rose, the Chinese government encouraged the purchase of real estate as a way of ensuring economic growth. President Xi Jinping’s administration supported the big real estate developers, who received credit facilities to boost their projects. However, the companies’ risky practices, coupled with unbridled speculation, began to have devastating side effects.
The most emblematic case is that of Evergrande, one of the country’s largest developers, which collapsed in 2021 with a debt of over 300 billion dollars. The company’s failure, followed by a series of bankruptcies by other giants in the sector, generated a default crisis that affected thousands of families and destroyed investor confidence.
Evergrande, which was responsible for more than 1,300 projects across the country, defaulted on its financial obligations, leaving millions of buyers and investors unsure about the continuity of their developments. The lack of confidence in the sector has led many young people to rethink buying real estate as a safe investment.
The crisis has created a vacuum of confidence in the market, and young people, who once saw buying real estate as an essential step towards building their future, now face a scenario of uncertainty. “The lack of stability in the big developers has made buying real estate even more risky,” says Lin Xiaoyu, 27, a financial analyst in Shanghai. “How can we risk our savings in a market where companies can simply go bankrupt out of the blue?”
In addition, the default crisis has generated a wave of protests in several cities, with buyers demanding money back and a solution for unfinished properties. This movement caused even more wear and tear on the real estate industry, which was already in decline.
Culture and New Priorities: A Generation Reimagining Success
In addition to economic and financial factors, there is a cultural component at play. For many young Chinese, priorities are changing rapidly. What was once a symbol of success and stability – owning a house – is now seen by some as a trap. The younger generation is more willing to invest in experiences and mobility, rather than in real estate that ties them to a single location.
The concept of “my home, my prison” is gaining traction among young people. Instead of investing in an apartment, many prefer to travel, study abroad or simply postpone the commitment of a mortgage. Li Mei, a 30-year-old, shares this view: “A house is no longer an investment for the future, it’s more of a worry. I prefer to rent and use my money for other projects. Freedom is more important to me than the stability that the house brought to my parents.”
This sentiment is reflected in recent studies that show a growing number of young people prefer to live with their parents or share property rather than take on the responsibility of a long-term purchase. Research carried out by the China Youth Institute showed that 42% of young adults aged between 25 and 35 do not consider buying a home to be a priority. This change in mentality, although subtle, is part of a larger trend in which the idea of progress is being redefined.
The transition from a society of materialistic consumers to one more focused on the consumption of experiences is also being fueled by digitalization. The rise of property-sharing platforms such as Airbnb has made it easier for young people to move between different cities without the burden of ownership. Social networks and influencers also play an important role in shaping new social norms, in which the idea of buying a home is no longer seen as a necessity, but as a distant and often worthless luxury.
The Economic and Social Impact of the Change in Mentality
The distancing of the young generation from the real estate market is not only a cultural change, but also an economic and political one. The real estate sector in China has been responsible for a significant portion of the country’s economic growth, accounting for around 30% of GDP. At a time when the country is trying to reorient its economy from a model of rapid, investment-based growth to one that is more balanced and sustainable, a downturn in the real estate sector could have a significant impact on job creation and economic stability.
The impact of the housing market crisis can be felt more broadly in the economy. With unaffordable prices and the collapse of major developers, domestic consumption has been hit hard. If young people don’t buy houses, they will probably invest less in products and services related to the real estate market, such as furniture, household appliances and renovations.
In addition, a lack of confidence in the market can affect social mobility. In the past, owning a home was seen as a way of ensuring financial security and enabling social advancement. With the purchase of real estate becoming more and more distant, many young people find their life plans constantly adapting. The dream of stability, which has always been central to Chinese culture, now needs to be reinterpreted in the light of new economic realities.
Impacts for the Future: Flexibility and Innovation
The crisis in the Chinese real estate market and the retreat of young buyers have deeper repercussions than simply the postponement of a dream. This phenomenon could redefine the foundations of the Chinese economy and alter the balance of the labor market. If young people, who represent the workforce of the future, are not interested in investing in real estate, the impact could be felt in several areas, from consumption to job creation and family formation.
However, this movement could also signal a positive change, in which future generations focus more on quality of life, flexibility and well-being. In a scenario where mobility and flexibility become priorities, new industries may emerge to support this demand, such as the rental market, shared spaces and technologies for managing temporary housing. The short-term rental market, for example, has shown consistent growth, with platforms such as Tujia (considered the “Chinese Airbnb”) gaining popularity among young people.
On the negative side, a slowdown in the real estate market could affect the economy as a whole. The Chinese real estate sector, once considered the engine of economic growth, is now struggling to get back on its feet. If confidence is not restored, this could lead to an even greater slowdown, with repercussions in other areas of the labor market and consumption.
Conclusion: The future of housing in China
As property prices continue to soar and government policies attempt to stabilize the economy, the fundamental question is: how will China cope with this change in mentality? The younger generation is increasingly moving away from the concept of buying real estate, opting for more flexible and less risky alternatives. The real estate crisis, far from being just a reflection of the economy, is shaping a new vision of success and the future, in which freedom and mobility are given more weight than traditional stability.
In a global scenario where the idea of “property” is being rethought, China may well be the vanguard of a movement that will reverberate in other parts of the world. The Chinese real estate crisis is therefore not only a story of an economy in crisis, but also a reflection of a generation that is willing to challenge old patterns and create a new, less cumbersome and freer path.
What is at stake, in essence, is a profound cultural transformation. In the end, the real question is not just about how houses will be bought or sold, but about what it will take for the next generation to have a more secure and fulfilling future, whether inside or outside their own home.
