Strained Chinese cities struggle to pay home buying subsidies
Amy Wang was counting on a 100,000 yuan ($13,800) subsidy promised by authorities in the eastern Chinese city of Weifang to t and furnish an apartment she bought two years ago. Still waiting for the money, she is yet to move in.
The 30-year-old now pays 6,000 yuan of her 8,000 monthly salary on the mortgage for the 1.1 million yuan apartment and another 1,800 yuan to rent another one, relying on her parents for other basic expenses.
“I feel under a lot of pressure,” said Ms. Wang, who works in electronics manufacturing, and bought the bare shell of her apartment, without ¦oors, interior walls or other ttings—which is common in China.
Weifang, with a population of more than 9 million and an economy larger than Croatia’s, and dozens of other Chinese cities, have promised subsidies and other incentives to homebuyers to prop up the ailing property sector.
But the real estate downturn also aects the ability of cities to lease land to developers, a key revenue source.
Frustrated buyers
This meant some local governments were unable to raise funds to pay the promised subsidies, frustrating buyers and casting doubts over future support measures. All of that could delay the property recovery.
“There’s a risk that households will start to perceive local governments as too cash-strapped to make market’s good on their subsidy promises,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics.
“That will certainly make an impact on homebuying decisions.”
Some 150 people from more than 50 Chinese cities have used a section for public comments on the website of People’s Daily, the o¨cial newspaper of the Communist Party, to complain about unpaid subsidies in the past six months.
Authorities in many of the cities have replied on the same platform, which requires users to register with their identication documents before posting.
O¨cials from Weifang, which had promised subsidies of 30,000 to 300,000 yuan, wrote on several occasions, blaming COVID-19, the economic downturn and tax cuts for not making the payments.
“Unusual short-term con¦icts between scal revenues and expenditures and enormous pressure on local nancial security resulted in delays in the disbursement of housing subsidies,” the nance department of Zhucheng, a municipality administered by Weifang, wrote in January.
In March, the human resources department of Weifang’s High-tech Industrial Development Zone said their district has “partially disbursed” the subsidies and more payments were being processed.
O¨cials from Zigong and Zibo issued similarly worded responses as Zhucheng in April. Also this month, Shangqiu pleaded for “patience,” saying the subsidies would be issued “when they are ready.”
Key sector
The property market accounted for about a quarter of China’s economic activity at its peak and budget revenues from land auctions dwarfed other sources of income in many cities before the pandemic.
Across China, land auction revenues in 2023 were about 20% below pre-pandemic levels in 2019, o¨cial data show. In Zibo, Shangqiu and Weifang, obudget revenues—which include land sales—were down 30%-50% over the same period.
The sums and total number of people aected by unpaid subsidies remain unclear.
Shangqiu civil servant Alan Liu, 30, says that some homebuyers in the city have received their subsidies, but he is still waiting for the promised 30,000 yuan, having bought a ¦at in a “prime location” in June 2022.