Explainer | What does China’s move to relax hukou residency curbs mean for the property sector?
- 51 Chinese cities have eligibility restrictions, which accounted for 21 per cent of national new home sales in 2018
- The new policy will effectively relax home buying curbs in 33 cities, according to Nomura
China’s top economic planner National Development and Reform Commission (NDRC) on Monday released an urbanisation plan that will see cities relaxing residency curbs on domestic migrants. The policy will have huge implications for the property sector that could boost prices in many cities while hardly causing a flutter in others. We break it down for you.
What is the policy about?
It is China’s urbanisation mission in 2019. The NDRC has ordered all cities with a population under 3 million to “completely lift all restrictions on domestic migrants obtaining residency permit”; cities with a population between 3 and 5 million should “comprehensively lift or relax restrictions” and cities with more than 5 million people should “lower the threshold and boost the number of people gaining residency permits”. This is a significant shift from an earlier policy that only encouraged migrants to settle in small cities while restricting them in bigger cities.
What is hukou and why does it matter?
Hukou is China’s rigid household registration system. The decades-old system was designed to control domestic migration and until recently hindered free movement of people from rural to urban areas, and between cities. Migrants without a local hukou, even after years of living and working in one city, are often denied access to education and health care benefits reserved for permanent hukou holders. The NDRC had previously set a target to grant hukou to 100 million people by 2020, so the gap between China’s actual urbanisation ratio and hukou holders could be narrowed. In 2018, 59.6 per cent of the population lived in cities while only 43.4 per cent had a local hukou.
