I heard that local governments are stepping in to buy homes themselves?

Simply put, when the government buys homes, the central bank foots the bill. Real estate developers become landlords, and the government replaces real estate agents.

The news has attracted widespread attention. At first glance, it seems the government is taking “drastic measures” to “back” the property market.

In reality, this move addresses the urgent needs of developers, provides timely support for talent, and ensures the city’s development remains on track. Indeed, it achieves three goals at once.

In this round, the competition is no longer about “urban purchasing power,” but rather about “who understands urban management better.”

Government Buybacks: Targeted Support

With only the fourth quarter remaining in 2022—the traditional peak season for the property market known as “Golden September and Silver October”—the market has felt decidedly lackluster.

Home purchase subsidies, property tax exemptions, and relaxed purchase restrictions… Since the start of the year, new real estate policies have been rolled out across the country, yet the overall market remains under pressure.

Not long ago, news of the “Suzhou government buyback” spread, sparking heated discussion. Could it be that the “hole” has grown too big to fill, forcing the government to step in and “bail out” the market?

Why is the government buying back properties?

From a direct perspective, the goal is to rapidly reduce inventory and alleviate pressure on property developers. Looking at the “chain reaction,” developers recoup funds and housing prices stabilize—a quick fix for short-term relief.

In the long run, after the government repurchases these properties, converting them into affordable housing reduces the pressure on the construction of such housing, effectively serving as a shortcut.

However, at this juncture, the implications clearly go beyond that.

With improved local infrastructure, convenient transportation and living conditions, and successful investment promotion, people will migrate to the city. Once they arrive, nothing provides greater peace of mind than owning a home.

By then, the government will have already purchased these properties and can sell them as affordable housing to talented individuals or lease them to companies as corporate apartments. With such high security and minimal financial cost, who wouldn’t want to settle down here?

When enterprises arrive, people follow; capital flows in, generating fiscal revenue; urban development keeps pace; and supporting infrastructure becomes more comprehensive—creating a virtuous cycle.

Meanwhile, cities experiencing outflows of population and capital will gradually be left behind by the times.

"Buy a Home, Get a Household Registration"—A Simple Yet Brutal Approach

In the race to attract talent, local governments are undergoing drastic changes in a subtle, imperceptible way.

From a "talent war" to erecting high barriers, from targeting vocational college graduates to strictly screening only bachelor’s degree holders—on the surface, there is mobility, but behind the scenes, restrictions are tightening.

Why is this happening?

Some believe it is in response to the "Housing for Living, Not for Speculation" policy. After all, if residency restrictions keep people out, housing prices won’t have to rise as much. However, cities can control the inflow into the housing market through social security-based purchase restrictions.

The establishment of population “red lines” stems from the “urban ills theory.”

Cities like Shenzhen, Hangzhou, Guangzhou, and Xi’an have grown too large in recent years, even before reaching their population red lines. Following the lead of Beijing, Shanghai, and Shenzhen, they have begun restricting population growth, raising residency eligibility requirements from associate’s degrees to bachelor’s degrees—all under the guise of “optimizing the population structure.”

It must be said that population management should focus on dispersal, not containment. For example, while Shenzhen may be at capacity, surrounding cities certainly have room to accommodate more people.

Instead of imposing population restrictions on major cities, we should allow the market to drive natural selection, letting people flow naturally to the surrounding areas. This is the only way to foster synergy and prosperity across the entire metropolitan region.

However, the most direct approach is reforming the household registration system to allow for the free movement of people.

"Buy a home, get a household registration"—Ningbo has already taken action.

Most notably, the policy now allows residency registration for properties with a 70-year property right, eliminating the previous requirement to “pay social security contributions.”

In other words, if you want to use the expedited household registration route through property ownership, you must purchase a commercial property with a 70-year property right.

This approach can be summed up in two words: practical. Undoubtedly, people will come and stay.

From this perspective, when cities attract and utilize talent, they should not blindly pursue grandeur, sophistication, or cutting-edge technology, nor is it necessary to judge people solely by their academic credentials.

Every city has its own unique character, varying levels of economic development, distinct industrial structures, and differing regional positioning; it is unrealistic for all to simply emulate Beijing, Shanghai, Guangzhou, and Shenzhen.

When choosing a city, talent doesn’t just look at where the money is; they place greater emphasis on the balance between life and work. This shift in choice may be awakening new perspectives on urban management.

The Logic Behind the Scenes: Stockpiling Pork

Looking back, the logic of local governments is essentially the same as that of pork reserves.

Pork prices follow cyclical patterns. When prices are particularly low and pig farms are on the verge of bankruptcy, local governments step in to purchase and stockpile pork. They acquire large quantities of pork and store it in cold storage to prevent pig farms from incurring excessive losses.

Then, when the market enters a bumper year and pork prices skyrocket, they sell these reserves on the market at very low prices. The release of frozen pork into the market suppresses the price of fresh pork, preventing prices from soaring to absurd levels.

After the “state purchases homes,” these commercial properties will be directly converted from “commercial housing” to “rental housing.” They will no longer enter the market but will become “state assets,” primarily serving the rental needs of “low- and middle-income earners.”

Consequently, the “existing stock of commercial housing” in the market will decrease sharply, and “unfinished commercial housing projects” in particular are likely to become priority targets for the “state-led home purchases.”

In the future, it will not only be “local governments” purchasing homes; “major central and state-owned enterprises” will also enter the market to buy properties, which will be converted into “employee dormitories” or “welfare rental housing.”

Regarding household registration, continuously lowering the threshold is a national requirement and the direction of development. Therefore, obtaining household registration after owning a residence in a sub-provincial city will become the norm.