Big city prices have want-to-be homeowners eyeing rural areas

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Big city prices have want-to-be homeowners eyeing rural areas

08:22, March 11, 2010

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Twenty-nine-year-old Wang Qiang, an IT company executive in Beijing, plans to purchase a new home this year, but not in the capital. Instead he has set his sights on Xi'an in Shaanxi province - his hometown.

After working at the company for five years Wang has saved 230,000 yuan ($33,685) - an amount that affords him a 60 square meter apartment in Xi'an, but merely a single bedroom unit in Beijing.

High property prices in the country's main cities such as Beijing, Shanghai and Shenzhen have driven away many white-collar workers like Wang, and are fueling an up tick in more rural buying.

Property prices in China's 70 major cities climbed 9.5 percent in January, reaching a 21-month high, according to the National Bureau of Statistics.

But in big cities, the growth rate was above 50 percent, leaving home ownership out of reach for millions of people.

"You can hardly find an apartment for sale that is priced below 1 million yuan in Beijing and I really don't want to destroy my life by paying rent for an apartment here," Wang said. "I hope to buy a new apartment in my home town for my wedding."

Even more worrisome for Wang is the fear he will be priced out of the market and not be able to afford a home in Xi'an later.

Statistics show that the average selling price of a property in Xi'an went up 800 yuan last year, up from 4,393 yuan per square meter in early 2009 to 5,194 yuan late last year.

"The price of my parents' residence in Xi'an rose only 600 yuan from 2004 to 2008," said Wang.

Guo Ni, a Beijing-based business reporter in her 30s, is also considering a home purchase in her hometown Guiyang in Southwest China's Guizhou province. But her concern is a bit different from Wang's.

"With nearly 500,000 yuan on hand, I plan to buy an apartment in Guiyang's core business area for investment," Guo said. "I am sure that the investment return must be much higher than bank deposits, especially with inflation pressure expected to grow next year."

Guo said she believes that, sooner or later, property prices in Guiyang will spike just like they did in Beijing and Shanghai last year.

"Considering the quickening pace of urbanization, properties in China's second- and third-tier cities show more growth potential," said Qin Xiaomei, chief researcher with property firm Jones Lang LaSalle Beijing.

For Liu Xiangning, a senior researcher with United Securities, increasing government investments into second- and third-tier cities will also increase area incomes, thus leaving more room for price increases in smaller cities.

Meanwhile, as soaring land prices in first-tier cities put more risks on property developers, they are more willing to tap the potential of second- and third-tier cities.

Vanke, the country's largest property developer by market value, bolstered its exploration into smaller cities in 2009. Among the 44 newly added projects last year, 37 are located in more rural areas.

"We believe we can obtain land parcels at a more rational price in those smaller cities," said Mao Daqing, Vanke's vice-president.

Source: China Daily

Shanghai, Chongqing housing "New Deal" deserves affirmation

16:10, March 10, 2010

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Almost all provincial and municipal officials at two annual sessions of the National People's Congress (NPC) and the National Committee of China's advisory body have been asked by media both at home and overseas on a very sensitive topic of housing prices.

Shanghai Party Secretary Yu Zhengsheng could not help but sighed and said in early 2009 that housing prices could rise no more. This Shanghai Party Secretary claimed at the current third sessions of the 11th NPC and the 11th National Committee of Chinese People's Political Consultative Conference (CPPCC) that he had not only viewed a hit-TV series called "Woju", or "A Snail's House", a Chinese version meaning a "humble abode", but recommended to all cadres at meetings to watch the TV series, as he noted, "housing situation is good for most of them, without necessarily having the first-hand experience with housing shortages.

Yu's sighs, however, cannot stem the housing prices "fever" or hike in Shanghai: Housing prices in this municipality rose by 40 percent in 2009, relevant date indicated. So, the Party Secretary was so troubled because runaway housing price has become the bottleneck of the city's talent strategy. Housing prices are too high, and people cannot afford housing, and then who will come to work in Shanghai?

From this perspective, a lot of provincial and municipal decision-making social sectors simultaneously introduced their "New Deals" designed to expand the coverage of social security realm and enlarge protective house species.

As for protective houses, they were mainly the affordable houses, which once made people elate and hate at the same time and even with more hatred than affection. As the right to own affordable housing can be purchased at low prices and sold out at higher prices and, once this right is materialized, it could mean huge profits – a congenital weakness, to make it into a seam of the "egg".

Minister of Housing and Urban-Rural Construction Jiang Weixin voiced both his anger and resolve to media on Monday, March 8th, pledging never to allow those driving a Mercedes –Benz to live in fittest affordable houses. As a result, some areas begin trying to bypass the "seam of the eggs" and introducing low-cost housing and public rentals on a large-scale.

For example, Chongqing and Shanghai, despite their huge population pressures, turn their eyes to public rentals. Chongqing Mayor Huang Qifan told media on March 5 that his city would build 20 million square meters of public rental in 10 years, including 10 million square meters in the next two to three years. On Sunday or March 7, Shanghai Mayor Han Zheng disclosed in an interview at People's Daily website his hope that the ratio of housing of the protective nature to total housing space in his metropolis would rise to 60 percent, and the total housing to launch this year in society as a whole would reach 20 million square meters, including 12 million square meters of the protective nature, and public rentals were also to be sprung up in 18 districts and counties in and around the city.

Mayor Han portrayed the fine, amazed prospects: The old urban area in Shanghai would be rebuilt or transformed for local residents to help resolve their housing issue; affordable houses built for new residents and junior or young white-collars, public rental for migrant workers from rural areas and different kinds of people, who have just started to work.

Then, can such initiatives achieve the effect of stabilizing house prices? This is not necessarily so optimistic nevertheless. Even Minister Jiang maintains that there is an immense pressure on housing prices over the next two decades. Those initiatives similar to those taken by Chongqing and Shanghai municipalities are mainly for social strata of low-income earners, who are not at all the strength to boost the housing prices. From a long-term point of view, however, if local governments peg or link rich land transfer prices to the investment policy of guaranteed housing, it is of significance to some extent to containing the non-rational rise of housing prices.

To say a step backward, even if this is temporarily helpless in stabilizing housing prices, the detailed survey of low-income groups done by the government and its layered efforts to resolve the housing difficulties should also be encouraged.

The housing needs of commoners in China have experienced a drastic turn from a planned to market economy and part of the planned supply has been almost non-existent to date. At present, to resume part of a modest recovery of public rental, low-cost housing supply and to ensure the vulnerable groups their home ownership by capitalizing on an integration of planning and marketing -- comply with China's present level of economic development and is also the home-coming of the government functions.

By Li Hongbing, a People's Daily Overseas Edition desk editor and translated by the PD Online

Big city prices have want-to-be homeowners eyeing rural areas

Big city prices have want-to-be homeowners eyeing rural areas

08:22, March 11, 2010

Email | Print | Subscribe | Comments | Forum

Shanghai, Chongqing housing "New Deal" deserves affirmation

16:10, March 10, 2010

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