Housing Fund Reform: Four Major Directions Emerge, 1.1 Trillion Yuan in Idle Funds Transform into "Second Wallet"

If 2025 is the “Year of Exploration” for public housing fund reforms, then 2026 will be the “Year of Full Implementation.”

According to monitoring by China Index Academy, approximately 270 policies optimizing the public housing fund were introduced nationwide in 2025. Moving into 2026, the pace of policy reform has not slowed but has become even more intensive—so far this year, over 30 cities across the country have adjusted and optimized their public housing fund policies, becoming an important tool for local governments to promote housing consumption.

Following the Central Economic Work Conference at the end of last year, which for the first time “highlighted” the deepening of the housing public fund system reform, the government work report this year mentioned the housing fund twice, a rare occurrence since it was last included in the report in 2015.

As one of the key social livelihood financial tools, the new round of public housing fund reforms has quickly sparked nationwide discussion, with many envisioning directions such as “All-in-One Livelihood Card,” “Livelihood Manager,” and “Second Wallet.”

Four Major Directions Emerge

Since last year, policies to optimize the housing public fund have been issued intensively, with some regions releasing new policies multiple times.

Taking Shenzhen as an example, in June last year, the housing public fund centers of six cities in Guangdong, including Shenzhen, signed agreements to accelerate the realization of a “same-city” experience for public fund services within the region, such as mutual recognition of deposit and loan information and cross-region loan recognition.

At the end of last year, Shenzhen issued a new version of the public housing fund withdrawal regulations, further increasing support for employees’ home purchases, explicitly allowing employees to withdraw their housing fund once for the down payment or taxes on a property purchased in Shenzhen; supporting withdrawals for purchasing homes outside the region, etc.

In March this year, Shenzhen’s public housing fund policy was further updated, focusing on optimizing contribution ratios, expanding coverage, and strengthening rights protection. It clarified that employees can voluntarily apply to increase their personal contribution ratio based on their employer’s contribution rate.

According to First Financial, the housing public fund optimization policies across various cities can be roughly divided into four directions.

First: Significantly Expanding Usage Scenarios to Achieve “One Fund, Multiple Uses.” For example, about 30 cities including Shenzhen and Xi’an support withdrawing public housing funds for down payments; Shenzhen and Anyang explicitly support paying property taxes; Chengdu and Weihai support intergenerational mutual assistance withdrawals; Xuzhou supports heating fee withdrawals; Shijiazhuang and Shenyang support property management fee withdrawals; Hainan, Chengdu, and Anshan support withdrawals for major illness-related financial difficulties; Guangzhou and Shanghai support elevator renovation withdrawals; Huanggang supports withdrawals for child-friendly renovations; Xuzhou supports withdrawals for elderly-friendly renovations.

Second: Accelerating Cross-Region Recognition and Loans to Achieve “National Roaming.” For example, six cities in the Greater Bay Area, including Shenzhen, signed agreements to enable “money to follow the person, service sharing”; Xuzhou expanded the scope of cross-region loans, allowing those with housing fund deposits in Beijing, Tianjin, Chongqing, Shenzhen, Guangzhou, and Shandong and Henan provinces to apply for public fund loans or convert commercial loans; Kunming removed restrictions on cross-region property purchases; Xining’s “National Cross-Region Offset and Repayment” business for housing funds officially launched.

Third: Expanding the Coverage of the Public Housing Fund—cities like Tianjin, Yichang, Lanzhou, Suzhou, Deyang, and Lishui have included flexible employment personnel in the contribution scope; Changsha, Yunnan, and Xuzhou have increased loan limits or optimized the criteria for multiple children families.

Fourth: Upgrading Convenient Services Related to the Public Housing Fund—such as Beijing adding “telephone loan” services for full-process zero trips for borrowers; Chengdu supporting monthly direct rent payments using the housing fund.

Fitch Ratings Asia-Pacific Corporate Rating Director Shi Lulu believes that the focus of the recent housing fund reform is, on one hand, to moderately expand the usage scenarios and, on the other hand, to improve the efficiency and convenience of fund utilization, so that more ordinary people can “access and use” it.

Shi Lulu believes that in the real estate sector, these measures help support reasonable first-time and improved housing demand, reduce financing costs for home purchases, and ease down payment and monthly mortgage pressures. Cross-region recognition arrangements also benefit mobile employment groups in settling in their work locations. In consumption, more flexible withdrawals and expanded usage scope can directly release household cash flow, enhance residents’ willingness to consume, and stimulate spending on home improvement, appliances, renovation, and aging-in-place projects along the “housing improvement chain.”

The China Index Academy also states that broadening the scope of public housing fund withdrawals can effectively improve the efficiency of fund use, reduce residents’ housing purchase costs, and promote housing consumption vitality. It is expected that this year’s policies will become more detailed, such as flexible adjustments to contribution policies (expanding coverage) and improving fund utilization efficiency, focusing on further leveraging the public housing fund to benefit people’s livelihoods and stabilize the market.

From “Small Wallet” to “Big Wallet” Transformation

Amid discussions on deepening housing fund reforms, social media has even seen a trend of “showing off” public housing fund balances. One user shared that their balance exceeded 600,000 yuan, but since they did not meet withdrawal conditions, the money has been “lying” in the account unused.

In terms of diverse scenarios, some users suggest promoting public housing fund withdrawals for property management fees nationwide; others propose adding withdrawals for children’s tuition; some even suggest using it for car purchases…

Behind these suggestions is the massive accumulation of housing fund capital. The “National Housing Public Fund 2024 Annual Report” released by the Ministry of Housing and Urban-Rural Development and other three departments shows that, as of the end of 2024, the total accumulated deposits in the housing fund reached 32.79 trillion yuan, with a balance of 10.93 trillion yuan.

Yan Yuejin, Deputy Director of Shanghai E-House Real Estate Research Institute, believes this indicates issues in the utilization of housing fund capital. The housing fund system urgently needs to shift from a “small wallet” to a “big wallet,” truly becoming a key node connecting residents’ savings with diversified consumption.

He suggests that, on one hand, the scope of support should extend from simple home transactions to include home replacement, renovation of old communities, decoration, furniture and appliance purchases, and other “full lifecycle” housing consumption, covering costs like property management fees to create a comprehensive “housing account.” On the other hand, application scenarios should be moderately expanded, gradually exploring extending the use of the fund to healthcare, cultural tourism, and other fields to better serve residents’ quality of life. Additionally, considering population mobility and industrial development trends, the coverage should be further expanded to include more new residents and flexible employment groups, giving full play to the fundamental role of the housing fund in expanding domestic demand and stimulating consumption.

Yan Yuejin also points out that broadening the use of the housing fund should be based on solving housing needs, not blindly expanding functions. If housing demand exists and support is appropriate, it can reasonably extend to other related fields. He views that including property management fees, rental payments, renovations, and repairs within the fund’s scope—building on existing home purchase support—is a positive innovation.

Another current market focus is that the price advantage of the housing fund interest rate is weakening. Data shows that the national first-time housing fund loan interest rate has fallen to 2.6%, but with the decline of commercial loan (LPR) rates, the interest rate gap has narrowed significantly to about 47 basis points.

How to rebuild the “comparative advantage” of the housing fund? Yan Yuejin believes that relying solely on continuous rate cuts is increasingly limited, and there is a need to balance bank interest margins and financial risks. Future advantages should be reflected in multiple aspects: reducing residents’ overall financing costs through “commercial to public” conversions and optimized combination loans; leveraging the stability of public fund loans unaffected by bank credit fluctuations; and offering differentiated pricing—such as ultra-low interest rates for families with multiple children, newlyweds, and unmarried or childless households—demonstrating the dual attributes of “inclusive finance + policy guidance.”