Talk about getting onto the property ladder at a young age. She may still be in nappies, but China’s youngest homeowner is grabbing the headlines. The two year-old, called Niu Niu, has just spent Rmb4 million on a luxury villa in Nanjing, the capital of Jiangsu Province.
To be fair, Niu Niu didn’t have to bother herself with choosing between a fixed or floating rate mortgage. The villa was in fact a present from her grandparents, who wanted to buy a “future dowry” for their grandchild, they told the Nanjing Daily.
The grandparents said they were concerned that surging home prices will take property well beyond their granddaughter’s reach. So instead of setting aside money for a college fund, they bought a house under her name instead.
As it turns out, Niu Niu is not alone in going to grandparents for help. First-time homeowners are younger in China than in many other countries. The Beijing Times reports that the average age of first-home loan applicants in the country’s capital was 27 years-old, compared with 42 in Japan and Germany, and 30 in the US.
Often they are relying on the lifetime savings of their parents, or borrow money from their grandparents for the downpayment.
“Because home prices have continued to rise in the past decade, many home buyers choose to buy a home early,” says Wang Shijie, director of the market research at Centaline Property. “They think that the earlier you buy an apartment the cheaper it is.”
This expectation that property prices can only go up is something that policymakers have been trying to temper in recent months. In April, Beijing announced a package of policies intended to blow some of the froth out of the market by restricting speculative purchases.
But recent data suggests sales of houses in many cities are taking off again.
The Beijing News reports that in the first week of September, average housing prices in Shanghai reached Rmb22,366 per square metre, an increase of 5% from the previous week. Shenzhen too saw average sales prices go up to Rmb22,202 per square metre. That was 12.8% up from the previous week and marked a record weekly high since May.
Analysts say the recent bout of tightening measures hasn’t addressed structural imbalances in the sector. “The sicknesses of the property market are excess liquidity, low real interest rates and the lack of investment alternatives. These structural problems are causing constant worry of a bubble and unless they are resolved, everything else is just a band-aid,” one analyst told the Wall Street Journal.
Band-aid or not, the central government is now said to be considering additional measures, including a vacant-property tax to punish speculators. The Beijing Municipal Bureau of Statistics has announced that it will be surveying the number of empty flats and villas in the country’s capital, a move that analysts say will help the government get a picture of the nation’s housing-vacancy rate.
In issue 75, we reported that there is growing speculation that many apartments are not being occupied. As many as 64.5 million urban residential electricity metres have registered zero consumption over the previous six-month period (i.e. nobody at home).
Shortly after the announcement was made, there was a rush to hire “vacant-house sitters,” says the Beijing Morning Post. The house-sitter is expected to fill in for the absentee owner, including switching on the occasional air-con and paying utility bills and property-management fees. If officials make house calls, the sitter can even pose feet-up-on-the-sofa style as the actual owner.
One such vacant-house sitter (identified only as Wang) told the newspaper that he didn’t think it would be possible to determine the exact number of vacant homes in the city.
But he thought that his job wouldn’t exist without the rumours of new initiatives to tax speculators who leave their homes vacant: “This service is only for the upcoming government survey.”
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.