Student Question: Master, hello. Many cities have introduced talent housing purchase policies for new residents — protecting genuine buyers, suppressing speculation, and ensuring that talented people have a place to live. But within roughly a year, these policies have already exited the stage of history. Why did the talent housing policy fail?
Master Chi’s Response: Shenzhen, as an innovation and reform pilot zone, was the first to launch an initial batch of talent housing priced at 60% of market value.
To date, Shenzhen has rolled out 11 talent housing projects totaling 8,510 units.
Yet the overall absorption rate stands at just 23.5%. Why is talent housing so difficult to sell? The main reasons are as follows:
Remote locations. Most talent housing is far from the city center. Commute times are long, and supporting facilities and transportation are inconvenient.
Eroded price advantage. Although talent housing is discounted to 60% of market price, Shenzhen property values have declined in recent years, and nearby new commercial housing and secondhand units are also being discounted. The value proposition has weakened.
Restrictive conditions. Buyers must agree to a ten-year lock-up: no resale, no rental, no mortgage, no purchase of a second unit. These terms severely limit buyers’ freedom.
Low usable area ratio. The ratio is universally poor — a unit of roughly 70 square meters typically offers only about 50 square meters of actual living space, making conditions cramped.
The government’s intention behind the talent housing policy was good — designed to retain urban talent. But it runs up against the basic operating logic of real estate.
Government revenue needs. Governments rely on land sales for fiscal income. Talent housing, as a benefit to new residents, requires the government to forgo profit — which is precisely why talent housing is typically sited far from city centers.
Preventing rent-seeking. Historically, preferential policies have been exploited by speculators. To keep talent housing from becoming an object of speculative flipping, the government was forced to impose many restrictions on buyers. Yet these same restrictions generate resistance among genuine buyers.
Squeezed developer margins. With the government ceding profit on talent housing, developers also struggle to turn a profit. In pursuit of returns, they cut costs — resulting in low usable area ratios, substandard materials, poor construction quality, inadequate property management, and deteriorating estate environments that make these units difficult to hold their value.
In summary, the talent housing policy was a worthy attempt to solve the housing problem for urban talent. Its intentions deserve recognition. However, in practice, the competing interests of government, developers, and buyers could not be reconciled, and the fundamental laws of the real estate market proved unyielding. The policy ultimately fell short of its expected results.