A Chinese real estate figurehead says he sees reverse mortgages as the answer to the country’s woes around its massive aging population.
Known as the “Godfather” of real estate in China, Meng Xiaosu has introduced a house-for-pension plan modeled on reverse mortgage products in the United States and other countries, writes the New York Times in a recent article titled: “China’s ‘Godfather of Real Estate’ Pitches Reverse Mortgages to Skeptical Elders.”
Despite cultural challenges and naysayers who stress that China’s insurance and government infrastructure will not support reverse mortgages en masse, Meng points to an aging population that is growing rapidly in China and which is projected to drag the country’s finances—by trillions of dollars in the coming years. That same population has largely enjoyed unprecedented real estate price appreciation during a phase of slow-growing pension plans, a fact that positions home equity as the answer for many of China’s graying population, he says.
“Under these circumstances, participating in the house-for-pension plan can be regarded as an important option for China’s elderly to improve their living conditions and live better in their later years,” Meng told the New York Times.
The product to date has been utilized by only several dozen households, according to the Times, but the potential is huge, according to Meng’s philosophy. In China, the elderly population is expected to number 350 million, or nearly a quarter of the population, by 2050.
“China’s elderly do not have much money,” Meng told the Times, “but they have valuable homes.”
Written by Elizabeth Ecker