Migrant Workers Can’t Fuel New Housing Demand In China: BAML – ValueWalk Premium
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Migrant Workers Can’t Fuel New Housing Demand In China: BAML

Constrained by various factors, including a lack of job opportunities in affordable cities, demand from migrant workers for China’s housing market is fairly limited, believe BAML analysts. David Cull and team point out in their March 16 research note titled “Can migrant workers save the housing market?” that China’s government policies so far have not been effective.
Migrant workers prefer mid to large cities
Even though the Central Leading Group on Financial and Economic Affairs meeting and the Central Economic Work Conference meeting late last year highlighted migrant workers as a key source of new housing demand in China, Cull and colleagues argue that the demand from them may be limited.

The BAML analysts estimate that a typical migrant worker household with one urban income and one rural income has total income that is only about 10% less than an average urban household with dual incomes. The analysts point out that for dual urban income migrant worker households, there is actually above 40% more, on average. The BAML analysts highlight that the former migrant worker household category has about 132 million units, while the latter has 18 million units. The following table captures the analysts’ computation of household income: migrant workers' households versus urban households.

Of note, the BAML analysts highlight that migrant workers prefer mid to large cities due to the high-income job opportunities. As can be deduced from the following chart, about 65% lived in these cities where home prices are expensive:


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