For farmers, when making the decision of whether to quit their homestead and buy a house in the city, it depends on whether this policy can really bring tangible benefits to themselves.
Author|Jia Yongmin
Academic advisor of the Institute of Equilibrium, special researcher of the Interdisciplinary Center of Zhejiang University
Recently, many places have introduced policies to encourage farmers to voluntarily withdraw from rural homesteads and buy houses in cities, which has aroused widespread concern in the market.
On June 21, the Nantong Municipal Leading Group for the Steady and Healthy Development of the Real Estate Market issued the "Notice on Further Promoting the Steady and Healthy Development of the City's Real Estate Market", which stipulates that from April 1, 2024 to June 30, 2025, a certain amount of rewards and subsidies will be given to those who voluntarily withdraw (give up) from rural homesteads to buy houses in the city, and the specific standards will be formulated by all parts of the city.
The day before, on June 20, the Fengyang County Real Estate Work Joint Conference issued the "Notice on Printing and Distributing Several Measures to Further Promote the Stable and Healthy Development of the Real Estate Market", which stipulates that from June 20, 2024 to December 31, 2024, the projects included in the scope of land increase and decrease in 2024 and the projects determined to be included in the scope of expropriation determined by the Office of the County Housing Expropriation Leading Group involve rural residents in the county who need to resettle homesteads, such as voluntarily giving up homestead resettlement and going to the city to buy houses. After the original homestead is returned to the village collective for recultivation and reclamation and demolition of buildings (structures), a one-time reward of 50,000 yuan will be given for house purchase (which is not the same as currency, house ticket resettlement, and house purchase subsidy); For the purchase of newly built commercial houses (excluding second-hand houses), the government will give the buyers a subsidy of 50% of the actual deed tax paid.
Earlier, on April 22, the Housing and Urban-Rural Development Bureau of Ezhou City, Hubei Province, the Ezhou Municipal Finance Bureau and other six departments jointly issued the "Notice on Promoting Local Urbanization and the Steady and Healthy Development of Real Estate", stipulating that rural residents who voluntarily withdraw from legal homesteads and demolish homesteads and related buildings (structures) will be given housing subsidies according to the area of the withdrawn homesteads, and the withdrawn homesteads will be returned to the village collectives for recultivation and reclamation.
In fact, this is not a new policy. For example, as early as the end of July 2022, Qianshan City, Anqing City, Anhui Province, issued a document stipulating that farmers who voluntarily quit their homesteads and settled in the city to buy houses will be given a one-time reward of 50,000 yuan to buy a house.
For those who voluntarily withdraw from the homestead and the homestead is reclaimed as cultivated land or other agricultural land, and the original homestead user is contracted to operate, after being identified, a reward of 30,000 yuan per mu will be given.
So, should farmers quit their homesteads to buy houses? The Internet is almost overwhelmingly opposed.
In fact, allowing farmers to use homesteads to obtain urban housing may be a good idea, but the current policy in these places is still too narrow.
01 The idea of hitting the "homestead" to save the property market?
Some people have questioned that this policy is to destock real estate and ease the financial pressure on local governments.
This is actually a clear card, and there is no need to question it. Discerning people can see at a glance that the introduction of such policies, whether in the name of promoting rural land circulation and improving land use efficiency, or to promote local urbanization and let rural residents live a better life, at least in the short term, the real purpose is only three words, that is, to save the property market.
After the central government introduced a package of bailout policies on May 17, the speed of real estate destocking across the country was seriously worse than expected, and the area of commercial housing for sale in the country was still more than 700 million square meters a month later, and more than 70% of the inventory was piled up in third, fourth and fifth-tier cities. Of course, this means that, in many places, land finances are practically untenable.
Therefore, encouraging farmers to abandon their homesteads and buy houses in the city is indeed to a large extent to tap the potential of farmers to buy houses, and it is just one of the policies that are constantly renovating to save the property market, such as reducing the down payment ratio to 7.5% and encouraging developers and buyers to share property rights.
For farmers, when making the decision of whether to quit the homestead and buy a house in the city, it depends on whether this policy can really bring tangible benefits to themselves.
In the context of the overall peak of the real estate market, although it is important for local governments to save the property market, buying a house can become a trap for buyers (no matter what incentives are adopted, it must eventually be implemented as an act of buying a house). There is no reason to think that farmers will not see this.
Therefore, even if the policy of encouraging farmers to withdraw from homesteads and buy houses in the city has a certain effect on increasing the transaction volume of the property market, the actual impact may not be very large.
There is a certain impetus for farmers to buy houses because although 50,000 yuan does not seem to be much, in many third- and fourth-tier cities, because the housing prices themselves are relatively low and have been lowered a lot, and the down payment ratio is also very low, 50,000 yuan or a little more may really be enough to pay the down payment. (The average price of local real estate in Fengyang is about 5,900 yuan/square meter, and if the down payment ratio of a 100-square-meter house is also reduced to the same 7.5% as that of Jiaozhou, Shandong, then the down payment of 50,000 yuan subsidy is already more than enough.) ）
However, whether or not you can make a down payment is only part of the budget constraints when buying a house, and more importantly, whether you have a stable repayment ability in the future. In the current economic environment where income expectations are unstable and the employment situation is sluggish, there should not be too many people who dare to decide to buy a house directly just because of an extra one-time income of 50,000 yuan, which is easy to fall into the trap.
Moreover, in addition to this, there are other factors that need to be considered, for example, after entering the city, the cost of living will increase, and practical problems such as children's education and medical security will surface.
As some netizens said, those who have money to buy a house in the city will not return the homestead for 50,000 yuan; And for a person who thinks that 50,000 yuan is a lot of money, the homestead may be his life, and it is impossible to agree to quit.
Broadly speaking, the real effect of this policy may be in the following two situations.
First, the homestead was already within the scope of expropriation, so by the way, an additional 50,000 yuan subsidy was taken; Second, the original area of the homestead is very small, the house has been seriously damaged and has lost its residential value.
In fact, the notice of Fengyang, Anhui Province does stipulate the scope, "the projects included in the scope of land increase and decrease in 2024 and the projects determined to be included in the scope of expropriation by the county housing expropriation leading group office involve rural residents in the county who need to resettle homesteads". Ezhou, Hubei Province, also stipulates that this policy is limited to "double concentration" areas.
As a result, the actual impact is likely to be quite limited in terms of the specific policies that can be observed at the moment.
02 In most rural areas, homesteads may only provide an illusory retreat
Some people also say that encouraging farmers to withdraw from the homestead property market is tantamount to letting them "exchange fish eyes for pearls", because housing prices are declining, while the value of rural homesteads is getting bigger and bigger, so this policy is an out-and-out big fool.
They gave two reasons.
First, in the long run, homestead resources will become more and more scarce, especially in some economically developed rural areas, especially with tourism resources, homesteads can be built into homestays, and there is more room for value-added.
Second, the value of peasants' homesteads is not only reflected in the fact that they can build houses and live in them, but also includes the value of providing peasants with a way out and a back-up guarantee.
Broadly speaking, these two reasons seem powerful, but neither of them actually stands up to scrutiny.
First, are homesteads becoming increasingly scarce? No, only a small percentage of homesteads are truly scarce.
According to the sample survey data of the Ministry of Agriculture and Rural Affairs, the idle rate of rural homesteads in 2019 reached 18.1%.
In 2019, Professor Wang Weiran of Qingdao Agricultural University conducted a survey of 267 villages across the country, showing that 39% of rural houses had a vacancy rate of more than 21%, 7.8% of rural houses had a vacancy rate of more than 51%, and the vacancy rate of individual villages was as high as 80%.
According to incomplete statistics, there are more than 20 million idle houses in rural areas on the mainland, covering an area of about 3,000 square kilometers.
Second, can homesteads really provide farmers with a way out and a back-up guarantee? It seems to be. When the peasants are old and can no longer work in the city, they can return to the countryside, live in the old house, and cultivate some land for the elderly.
However, please think about it from another angle, isn't it the greatest inequality and injustice for a person to work hard in the big city when he is young, and then he can only return to the countryside to retire in his old age? Not to mention the differences in infrastructure and living conditions, how can social security and public services in cities be compared with those in rural areas. (This is not to deny that a small number of rural areas have also achieved a fairly high standard of living, as conditions vary widely across China.) ）
Of course, more important is the income gap between urban and rural areas.
The theoretical analysis of economists and the experience of other countries in the world tell us that the increase in the income level of rural residents needs to be achieved fundamentally through large-scale agricultural operations, and this can only be achieved if a high level of urbanization is reached. Only by continuing to promote urbanization and reduce the proportion of rural people to less than 20% of the total population can farmers who remain in rural areas become farmers and eventually increase their incomes sustainably through large-scale operations.
The old approach to increasing peasant incomes, in which peasants worked in the cities when they were young and returned to the countryside in old age, was neither fair nor sustainable. This is also the reason why the "citizenization of migrant workers" has been repeatedly emphasized.
Not to mention the income level of the rural areas, but only to say that the rural homesteads can provide the so-called retreat and back-up security, in fact, there is no meaning, it is likely to be just an illusory bubble.
03 50,000 yuan is not enough, and farmers should be allowed to share the income from land value-added
In 2023, China's urbanization rate will reach 66.16%, and there is still room for improvement by about 20 percentage points compared with developed countries. The next new stage of urbanization should be the stage in which the population of small cities will accelerate the transfer to large cities.
It is also in this sense that if farmers withdraw from their homesteads and buy houses in cities, if they are confined to the local area (often small cities or counties), it is indeed easy to fall into the trap, because the future trend may be: the population and industry of small cities continue to lose, medium-sized cities are siphoned by large cities while siphoning surrounding small cities, and large cities further exert scale effects and agglomeration effects. This also means that in the future, it is likely that only in large cities will industries and housing prices be effectively supported.
This process will inevitably be accompanied by changes in the household registration system and land system, and the current property market situation will force and accelerate the reform in this regard.
Allowing farmers to use homesteads to obtain urban housing may be a good idea, but the current policy in these places is still somewhat narrow.
As we all know, China's urban construction land needs indicators, and when the urban construction land indicators are exhausted, the government can convert rural construction land (including homesteads) into urban construction land. Farmers withdraw from homesteads, and the government gives a reward of 50,000 yuan, which can also be said to be a way for cities to obtain construction land.
But there is a second unfairness implicit here, that is, most of the land appreciation realized in this process is not owned by farmers (a farmer who quits the homestead will only get 50,000 yuan, but the homestead may be sold to the developer for 500,000 yuan or more).
To recap, the first type of unfairness discussed earlier, that is, farmers who work in the cities when they are young and can only return to the countryside to retire when they are old is very unfair to them.
The following describes a system that can resolve or alleviate both of these inequities, with the core goal of allowing farmers who have worked and lived in large cities for a long time to use their homesteads to obtain household registration in large cities while sharing in the benefits of land appreciation.
Suppose SH City is a megacity, FY County is a labor export area, and tens of thousands of FY County people work and live in SH City for a long time. The SH urban construction index is severely insufficient, and the homestead vacancy rate of migrant workers in FY County is high.
Now, through consultation, SH City and FY County have established such a mechanism: from among the people who have worked and lived in SH City for a long time in FY County, select a number of qualified families (for example, they can be screened by residence permit points or social security payment years), withdraw from the homestead, transfer the construction land index to SH City, and the resulting land appreciation income will be distributed between SH City, FY County and these families in a certain proportion, and these families will be registered in SH City.
For the sake of understanding, let's take a simplified numerical example. Suppose there are 100 families in FY County who are eligible and willing to participate, and each family has a homestead of 200 square meters, so that SH can obtain 20,000 square meters of construction land. Assuming that the value of construction land per square meter is 50,000 yuan, the total value added of land is 1 billion yuan. Assuming that the land appreciation income is distributed between SH City, FY County and these households in a ratio of 6:1:3, then SH City and FY County will receive 600 million yuan and 100 million yuan respectively, and each family will receive 3 million yuan.
As a result, these families can use the money to buy a house in SH City and settle into a household, resolving the above two aspects of injustice.
Of course, this example is arbitrarily given for illustrative purposes and may not fully correspond to the actual situation. In any case, the increase in land appreciation in large cities is formed in the process of participation in industrialization and economic development by a large number of labor from rural areas, who are entitled to share.
This may seem a bit fanciful, but it's not entirely impossible.
In fact, as early as March 26, 2018, the General Office of the State Council issued the Administrative Measures for Cross-Provincial Adjustment of Surplus Indicators Linked to the Increase and Decrease of Urban and Rural Construction Land, which provides a legal basis for rural farmers and mainland governments to share the benefits of land appreciation in the process of industrialization and urbanization of large cities.
The downturn in the housing market and the financial pressures it brings have spurred change, or at least pushed us to think big.
This article is a special original manuscript of Hexun Commentary Department, and only represents the author's position.
Editor|Liu Jun