On May 11, Nanjing, Jiangsu Province relaxed the conditions for settlement, announcing that "you can settle down if you buy a house". Nanjing abolished the "buy a house and settle down" policy on August 1, 2018, which also means that after nearly 6 years, Nanjing has restarted to implement the "buy a house and settle down".
According to this policy, persons who have a legal and stable residence (i.e., a house with legal property rights) in the urban areas of Nanjing can apply for their own household registration to move into the housing, and their spouses, unmarried children, and parents (who have exceeded the statutory retirement age or have gone through retirement procedures) can apply for household registration to move with them.
Real estate industry policy unfreeze the hukou system?
In the past, there were actually some educational thresholds and social security thresholds set up in various places, and only for individuals, spouses, and parents, they could not obtain household registration together. To put it simply, as long as you buy a house, you can solve the problem of household registration of spouses, children, and parents, and the problems of children's schooling. Especially for parents, the previous policy of snatching people was exclusionary.
At present, the average price of new houses in Nanjing is about 28,000 yuan, and in remote areas, the house price is about 15,000 yuan. In other words, if you buy a 60-square-meter house, 900,000 yuan, and a down payment of 270,000 yuan, you can get a Nanjing hukou. This funding threshold is not high. Moreover, it is not necessary to take 270,000 yuan to change the household registration, and it will also cost money to buy a house in any city. This means that the threshold for obtaining a Nanjing hukou is very low.
Nanjing's liberalization of settlement is a follow-up to the previous liberalization of the purchase restriction policy.
According to incomplete statistics from the Zhuge Data Research Center, as of May 9, a total of 50 cities across the country have relaxed the purchase restriction policy. Among them, 22 cities, including Chengdu, Hangzhou, Foshan, Dongguan, Xiamen, Nanjing, and Suzhou, have completely lifted purchase restrictions.
First-tier cities have partially relaxed purchase restrictions, Beijing has relaxed purchase restrictions outside the Fifth Ring Road, Shenzhen has shortened the social security payment period for non-registered people, and Guangzhou has relaxed purchase restrictions of more than 120 square meters. Hangzhou's withdrawal from the purchase restriction means that except for the core areas of first-tier cities, the purchase restrictions of the previous round of layout are basically all withdrawn. Among the 21 megacities in China, only Shanghai, Beijing, Shenzhen, Guangzhou and Tianjin still have limited purchase policies.
However, it can be expected that the lifting of purchase restrictions alone will not be enough to support housing prices.
Since the cancellation and relaxation of purchase restrictions in August 2023, home prices in many cities have not recovered.
In September 2023, Hefei will cancel the purchase restriction. In the third quarter of 2023, the price of second-hand homes in Hefei fell by 2% to 3% year-on-year, and after the purchase restrictions were lifted, the price decline in Hefei expanded to 4.9% to 6.4% in the first quarter of this year.
In November 2023, Xiamen lifted the purchase restriction, and in March 2024, the year-on-year decline in second-hand housing in Xiamen still reached 9.6%.
On January 30, 2024, Suzhou proposed to completely cancel the purchase restrictions, almost the last non-first-tier and non-provincial capital cities to propose a complete cancellation of purchase restrictions. However, from January to May, the Suzhou property market continued to fall.
In addition, the year-on-year change in second-hand housing prices in Zhengzhou and Nanjing since 2023 is also in negative growth. In March this year, the year-on-year decline in second-hand housing in Zhengzhou and Nanjing reached 8.2%, 9.5% and 9.6% respectively. Therefore, Nanjing's relaxation of settlement is to "add oil" to the previous relaxation of purchase restrictions.
In the era of real estate upswing, buying a house is an investment behavior, and when the house rises, there will be more demand for replacement, constantly flipping, increasing leverage, and increasing wealth, which in turn supports higher real estate prices. Moreover, based on the purpose of investment, when there is no purchase restriction, funds will flock to hot cities across the country. At this stage, there is no need to pour too many people into the house to support the housing prices of a place.
However, in the moment, the expectation of rising house prices is gone. The demand for real estate, mainly for living, needs to be supported by a constant influx of people. Therefore, relaxing or even completely abolishing household registration restrictions to attract the population is an inevitable choice.
It can be seen from the recent policies issued by hot cities that the list of cities that have relaxed the restrictions on settlement is gradually spreading to hot second-tier cities. This trend has already formed. According to the statistics of the China Index Institute, in recent years, about 20 cities have introduced policies to apply for settlement when buying a house, including core second-tier cities such as Nanjing, Wuhan, Hangzhou, and Shenyang, as well as third- and fourth-tier cities such as Jinhua, Zhumadian, and Karamay.
The hukou system has been loosened, and first-tier cities are not immune
When a city like Nanjing is liberalized, many people will ask: Will Beijing, Shanghai, Guangzhou and Shenzhen be liberalized? Hangzhou can be seen as a weather vane.
Zhejiang Province has also made a provincial settlement before. In July 2023, the General Office of the Zhejiang Provincial Government issued the Implementation Plan for Promoting the Implementation of the System of Providing Basic Public Services in Places of Permanent Residence in Zhejiang Province and Orderly Promoting the Urbanization of Rural Migrant Population (2023-2027).
According to this policy, Zhejiang has further liberalized and relaxed the conditions for the settlement of the agricultural transfer population. The province (except for the urban area of Hangzhou) has completely abolished the settlement restriction policy, unified the standards for the settlement of rural migrants from other places and local areas, tried to implement the household registration system based on the place of habitual residence, and implemented the policy of legal and stable residence (including lease) settlement and the relocation of immediate family members such as spouses.
However, this policy excludes Hangzhou.
On May 9, 2024, Hangzhou City, Zhejiang Province issued a notice on optimizing and adjusting the regulation and control policies of the real estate market. It mentions that the purchase of housing within the scope of Hangzhou will no longer be reviewed for qualifications. Among them, the content of Article 6 is: optimize the points settlement policy, and non-registered persons who have obtained legal property rights housing in the city can apply for settlement.
To put it simply, there is no restriction on how many sets outsiders want to buy, and then they may also send their accounts. This is tantamount to changing Zhejiang's provincial settlement policy in July 2023. To a certain extent, Hangzhou, which has been excluded, can also settle in the whole province and even the whole country.
Therefore, even Hangzhou has to let go of household registration and grab people.
Of course, it should be said that this Article 6 is still a little vague, and it is not clear how it will be optimized, and whether the application for settlement can be approved as soon as the application is made. Obviously, this is a matter of hindsight, depending on the effect of the policy after the cancellation of purchase restrictions. If the housing price stabilizes, then the approval of this account may be stricter, otherwise, the account will be sent more.
It should be said that the effect of Hangzhou's policy is not bad. According to data from the Hangzhou Municipal Bureau of Housing Security and Real Estate, 179 new commercial houses in Hangzhou were sold on May 10, an increase of 19 units from the previous day and an increase of 11.9% from the previous day.
In the past week, the average daily transaction of new commercial housing in Hangzhou was 109 units, and the number of units traded on May 10 was 64.2% higher than the average level in the past week. According to data from Hangzhou Shell Research Institute, compared with the average value in April, the number of second-hand housing inquiries increased by 54% on May 10, and the number of new second-hand housing listings increased by 91%.
However, as mentioned earlier, when the demand for housing shifts to residence, it must need population support.
Population distribution will eventually conform to economic laws, and large cities will be larger
There is a saying about real estate, "look at the population in the long term, look at the land in the medium term, and look at finance in the short term", but this statement is aimed at the overall situation of a country. Population is a long-term variable for a country and is destined to be slow. But for a region, population is a medium-term, or even short-term, variable that can change rapidly in 5-10 years. Only when people move in can housing prices be supported. As long as enough people are grabbed, it is natural that some people will settle down and buy houses.
This logic is true for Nanjing and Hangzhou, and will be true for Shanghai, Shenzhen, and Guangzhou in the future. Although these first-tier cities have not yet lifted the purchase restrictions and household registration restrictions, it will not be too long. In fact, since May, Shanghai has further relaxed the restrictions on settlement.
This means that China's urbanization policy has entered a new stage: the market determines the distribution of population – and the economic law has finally triumphed again.
When it comes to urban development, there is a well-known ZIPF (Zipf) law. The law argues that for a country, there is a simple correlation between the population of a city and its ranking in the size of its city. The population of a country's largest city is twice that of the second largest city, three times the population of the third largest city, and so on, N times the population of the Nth largest city.
To put it simply, the concentration of population in large cities is the law of economic development itself.
South Korea's capital area (including Seoul, Incheon, and Gyeonggi Province) covers an area of 11,826 square kilometers, which is twice that of Shanghai, accounting for 11.8% of the country's land area, and has a population of more than 26 million, accounting for 50.2% of South Korea's total population. The Tokyo metropolitan area accounts for 10% of Japan's population, and the Tokyo metropolitan area is 13,400 square kilometers with a population of 36 million, and one out of every three Japanese lives in a small area. The population of the United States is 300 million, and the population of the New York metropolitan area is 21.57 million, accounting for 7.3% of the population of the United States.
Shanghai has a total area of 6,340.5 square kilometers and a population of 25 million, accounting for 1.8% of the total Chinese population. It can be seen that this proportion is far less than that of large cities in other countries. One of the important reasons why China does not comply with the ZIPF law is that the previous population migration was restricted by the household registration and real estate purchase restriction policy, and with the lifting of the household registration and purchase restriction policy, China's population distribution will further comply with the ZIPF law.
Wages are rigid, but housing prices are already falling, so the difficulty of getting to the big cities is falling, not rising. With the scale effect brought about by further agglomeration, employment and wages in large cities will be further advantageous. These repeated reinforcements will form a further agglomeration of the population, which will support local housing prices. The housing prices in the leading cities have stopped falling, which is good for stabilizing the country's psychological expectations for fixed assets and for the internal circulation of consumption.
On the other hand, this will also have a strong impact on many provincial capitals. In short, in the past, many cities were dancing in shackles, but now, the shackles are gradually unraveling.
For young people, the choice of where to live is different for everyone, and there is no standard answer. But if the focus is on future development, then the law of population distribution must be taken into account. This factor is more important than ever. If you are holding coins to buy and yearning for the big city, but now you just don't have qualifications and are worried about not having a hukou, then you might as well wait a little longer. It won't be too long to wait.
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Author | Liu Yuanju (financial columnist, researcher of many think tanks)
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