Buying a house in China: A guide and a few considerations

Among the many different ways to invest your hard-earned money, the good old “brick”, as we say in Italian, can be a sensible choice. China might not be the best place to invest in real estate, since it is not possible to receive any special rights along with your purchase, such as in Thailand for instance, which provides permanent residency to all expats who buy enough property. Saving some money in China and investing in real estate is not an impossible task, however, it was certainly easier to do 10-20 years ago. China might not be the best market for buying a home anymore, but it is still certainly better to save and invest than to just blow money on rent. 


China is not a country where expats often buy property and the Chinese economy has virtually no interest in receiving foreign money from real estate investments. The outflow of capital from Chinese people to buy property overseas is staggering and the government already limits the amount of property investments a person can own. The price of homes in Chinese cities has been constantly going up for decades. 


Foreigners have made considerable gains from buying property in China. However, if you want to buy property in China, you need to first consider a few things. You can never truly own property in China, since all land is leased by the government for 70 years at a time. Foreigners can only buy one piece of property and can’t rent it out and oftentimes it is primarily expats married to Chinese natives that buy properties in China.    

Should you decide to go ahead with investing in real estate in China, you can refer to the following steps: 


Step 1: Obtain proof of your residence in China from the local Municipal Bureau of Public Security.

Step 2: Once you find a suitable property, the next step is to submit a preliminary agreement in which you will need to set out the terms and conditions of purchasing the targeted house. A deposit of 1% of the agreed selling price should be paid to the seller.


Step 3: The seller and you will then draft and sign the official sale contract (which has to be notarized if the buyer is a foreigner).

Step 4: (This step is unique for foreign buyers) You are supposed to go to your local Foreign Office in order to have the purchase approved by the government. If a mortgage is needed, you will need to secure a loan by taking your signed and notarized contract as well as any other document that is required by the bank. Depending on the specific rules of your bank, you can take your loan either in RMB or in Foreign Currency. You need to pay the deposit and an initial 30% of the selling price as a down payment to the seller.


Step 5: You need to visit the Deed and Title Transferring Office so they can transfer the title of the house under your name. The ownership Certificate will be issued to you after a few weeks and you will now become an official homeowner in China.

Buying a home in China has seemed to reach its peak and even if no one can accurately predict a property bubble bursting, it is important to consider that China has a massive over supply of houses, and therefore perpetually rising house prices are unlikely. Many wealthy people in China buy homes that they never use nor rent and, consequently, the number of unused properties is on the rise.


China is estimated to have 50 million unsold properties, which accounts for 1/5th of the entire market. There are few homes that are being bought to actually live in, as prices have skyrocketed. Property is still seen as a safe investment even if prices get wildly out of hand, as people that own property have thus far hardly ever lost money. 


The Chinese stock market has been unstable in the last few years, consequentially, the money that had exited the stock market in its crash in 2015, has been further propping up the real estate market, with unsafe stock money converted into safer real estate investments. As this money dries up, it may reduce any new surging house prices.