Nova workboard

a blog from young economists at Nova SBE

Supporting low-income migrant workers to buy homes in China

Recently,there are about 282 million rural migrant workers in China, which is one third of labor force in China. In this post, migrant workers refer to workers who have rural household registration. (In China, there are two kinds of household registration, urban household registration and rural household registration) Migrant workers make a significant contribution to Economic development in China. However, a lot of migrant workers cannot enjoy the same public service as urban household registration holders. When it comes to education, housing and social medical care, there is a difference. Since they do not have a home in the city, their children and other family members stay in their hometown and are away from migrant workers. It’s essential for public policy makers to publish more helpful policies to help low-income migrants to purchase an affordable home in urban areas.

In recent years, China has encouraged white collar workers to buy houses due to house supply surplus; however, the demand is limited. In fact, rich people usually have more than one real estate property, not only for private use but for investment as well. This phenomenon has caused ghost town appear in several parts in China. Thus, as Rosealea Yao, a China investment analyst for research firm Gavekal Dragonomics said, we cannot ignore the demand from low end since there is no demand at the higher end. The importance of keeping the construction volume is obvious because one third of GDP growth comes from real estate and construction, according to Rosealea Yao.

The problem existing in real estate purchasing in China is that rich people buy several houses and make the price go up while low income people cannot even afford to buy one house for basic living. To solve this issue, the government has carried out policy such as interest-rate cuts and the removal of purchase restrictions. However, this does not help a lot to low income migrant workers; most encouraged buyers were white collars. In February 2016, the government cut minimum payments down to 20% for first homes and reduced transaction taxes as well.

To conclude, it is necessary to balance the real estate supply and demand in a healthy way. Otherwise, the supply surplus may influence the price of houses and decrease in construction. A good method is to encourage low income migrant workers who have a large demand to buy homes in cities and avoid rich people to buy too many real estate properties for investment. To achieve this, having a higher property tax for second house, which is carried out by the government, is helpful. In addition, helping low income migrant workers to have better access to mortgage loan as well as controlling the price as an affordable one should also be taken into consideration more.”>282 million rural migrant workers in China, which is one third of labor force in China. In this post, migrant workers refer to workers who have rural household registration. (In China, there are two kinds of household registration, urban household registration and rural household registration) Migrant workers make a significant contribution to Economic development in China. However, a lot of migrant workers cannot enjoy the same public service as urban household registration holders. When it comes to education, housing and social medical care, there is a difference. Since they do not have a home in the city, their children and other family members stay in their hometown and are away from migrant workers. It’s essential for public policy makers to publish more helpful policies to help low-income migrants to purchase an affordable home in urban areas.

—By Qianyu He

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Author: studentnovasbe

Master student in Nova Sbe

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