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Alice Li

China’s property downturn and sluggish consumer spending have become twin anchors weighing down the economy over the past few years. Now, scholars at a top Beijing university are proposing a measure they believe could ease both problems: a mortgage subsidy.
The Tsinghua University economists have called for the introduction of mortgage interest rate subsidies as part of a wider effort to stabilise the property market, arguing that arresting the decline in housing prices will be critical to getting households spending.
The proposal comes as China looks to domestic consumption to shore up economic growth amid a volatile external environment, while a years-long real estate slump undermines household finances and weighs on confidence.
Given that nearly 80 per cent of China’s household wealth is tied up in property, a mortgage subsidy could play an important role in boosting consumption if it helps to stabilise property prices, researchers from the university’s Academic Centre for Chinese Economic Practice and Thinking (Accept) said during an event on Tuesday.
“Fluctuations in housing prices can have a major impact on residents’ wealth, which in turn affects their consumption potential,” they added.
The team estimated that home prices in China’s major and medium-sized cities had fallen 16.5 per cent over the past three years, leading to a 13 per cent shrinkage in urban household assets.
“In the face of continuously falling home prices, authorities need to adopt a broader approach and swiftly introduce mortgage interest subsidies to reverse residents’ homebuying expectations.”
The Accept team suggested targeting the subsidy at new personal mortgages, noting that Chinese consumers remained reluctant to buy homes partly because falling prices made the effective cost of ownership high.


A 1-percentage-point subsidy on personal mortgage interest rates would cost the government about 70 billion yuan (US$10 billion) in its first year, the researchers estimated.
With China’s residential real estate assets worth as much as 280 trillion yuan, the policy could prove “very cost-effective”, they said.
China’s recent efforts to stimulate domestic spending have focused on a large-scale consumer goods trade-in programme, with Beijing pouring 300 billion yuan into the scheme last year.
The consumer subsidies are set to continue this year, though the scale of the funding has yet to be confirmed. Premier Li Qiang is likely to provide details on any plans during his agenda-setting government work report in March.
“Mortgage interest subsidies could definitely punch well above their weight, with very significant effects,” the Accept team said.
China’s property market has been struggling for years, with falling housing prices and softening investment sending ripples through the economy, acting as a drag on growth and eroding consumer confidence.
Property investment fell by 15.9 per cent year on year in the first 11 months of 2025, while sales of new homes by floor area declined 7.8 per cent, according to the National Bureau of Statistics.
Chinese authorities have taken a string of measures to support the sector, with several major cities – including Beijing and Shanghai – easing home purchase restrictions in an effort to stimulate housing sales.
At the tone-setting central economic work conference in December, China’s leaders pledged to make stabilising the property market a priority in 2026.
Beyond short-term measures, the Accept team said the government should establish a new department responsible for the consumption side of the property market – including housing prices – as currently policymakers focus mainly on supply-side regulation.


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Beijing is striving to boost household spending amid an economic slowdown. But first it needs to stabilise the housing market, scholars say


Beijing is striving to boost household spending amid an economic slowdown. But first it needs to stabilise the housing market, scholars say.


Why mortgage subsidies could be key to getting China’s consumers spending

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Beijing is striving to boost household spending amid an economic slowdown. But first it needs to stabilise the housing market, scholars say

Beijing is striving to boost household spending amid an economic slowdown. But first it needs to stabilise the housing market, scholars say