The frustrations of the first-time buyer seem to extend across cultures – and housing markets.
“I don’t understand! I am a well-educated professional with a well-paying job. I earn Rmb100,000 ($14,640) a year! So why can’t I live where I want to?” asks Zheng Tianxiao, a 28 year-old in Shanghai.
Zheng has been shopping for a home for almost four years but has not been able to find one he can afford.
Worse still, not being able to buy has stymied his chances of finding a wife, because he is always being snubbed for not having a home of his own, he told China Daily.
But Zheng is hardly the only one in China who can’t afford a house. While house prices are continuing to languish elsewhere, China’s property market has almost fully rebounded this year as investors take advantage of low interest rates and generous loan facilities.
The cost of housing rose for the fifth straight month in July in 70 large and medium-sized cities across the country, according to figures released by the National Bureau of Statistics.
In Beijing, for instance, housing prices reached Rmb14,500 per square metre, a 9% increase over June’s price. Meanwhile, prices in Shanghai – often seen as a benchmark for the nation – hit Rmb15,675 per square metre in July, an increase of 20% on the previous month.
The climb was steepest in the luxury segment, with average prices soaring by around Rmb10,000 per square metre in just a matter of months. Shanghai Westwood, a luxury residential development, was demanding Rmb16,000 per square metre back in March – now it is commanding Rmb26,000 ($3,796).
As property prices skyrocket again, ordinary people are being shut out, says Li Ming, a local property expert. An internet poll on Sina.com suggested 80% of the 7,865 respondents thought the current housing prices were too high. About 24% said it would take 30 years to pay off a two-bedroom apartment.
How things have changed. Just a few months ago, market observers were predicting that it could take more than two years to work off China’s surplus housing. Today, they are raising concerns that the country may not be building enough new homes to meet demand.
If the market maintains its momentum all excess housing would disappear entirely in the next three months, says property agent DTZ. This will then drive up prices further on new properties. It seems Zheng is not going to find a wife any time soon.
Experts say the government should implement another round of housing reform in order to meet the growing demand from the middle class. It has already allocated Rmb400 billion to be channelled into affordable housing projects across the country. But economist Mao Yushi told China Youth Daily that some of the benefits of ‘economic housing’ might not reach middle and low-income families –due to corruption both in how it is developed and then how it is sold.
Competition for new-built property is brisk and in a high profile case oil giant China National Petroleum Corp (CNPC) has recently come under fire for buying more than 1,000 apartments in the middle of Beijing.
The mass purchase hit headlines at just the wrong time: rekindling the debate about the shortage of housing.
Onlookers are crying foul on the price paid too. According to Beijing Evening News, CNPC bought the eight apartment buildings in Beijing’s Chaoyang district at about Rmb9,000 per square metre, well below the market rate of Rmb23,000 per square metre.
“CNPC got the low price because it has been working on the group purchase with the developer since 2005, when the housing price of the area was still Rmb9,000 per square metre,” says Wang Qiong, spokeswoman of Huayou Beijing Service Company – the logistics arm of the oil firm.
The fact that a state-owned firm was able to cut such a deal rankles with some citizens.
“Life is always unfair to less well-off families, like us,” laments Hu Wenna – who, incidentally, is also shopping for an apartment.
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