Leave or stay, young Chinese struggle with high housing prices

17:05, January 03, 2010      

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After 10 years in Beijing where they attended college, fell in love, and got married, 30-year-old Xue Jinyong and his wife decided to leave the city as they are expecting their first child but cannot afford an apartment.

With a monthly income of about 11,000 yuan (1,617 U.S. dollars), the couple used to eye a second-hand apartment of 73 square meters, which is priced at 1.35 million yuan, on the western fringe of the city.

However, the savings of the white-collar couple and that of their parents in the countryside were not enough for the minimum down payment of about 400,000 yuan.

"After days of consulting with relatives and friends, we decided to move to Taiyuan, where the average housing price is only one fourth of Beijing's 20,000 yuan per square meter," Xue said.

Though with a lower salary in Taiyuan, capital city of the northern Shanxi Province, "I can buy a big apartment and we can finally live in our own home," he said.

While Xue chose to realize the traditional Chinese dream of owing a residence by moving out of Beijing, struggle with the high housing prices goes on for those who are determined to pursue the dream in big cities like Beijing, Shanghai and Guangzhou.

With housing prices soaring in metropolises nowadays, buying an apartment is becoming a luxury many people cannot afford.

According to Beijing Municipal Statistics Bureau, the per capita annual income in 2008 was 44,715 yuan, while apartments are selling for an average 20,000 yuan per square meter.

It means an apartment of 80 square meters costs almost 1.6 million yuan, which would require a household of two wage-earners to repay with all of their salaries for about 17 years -- excluding the interests.

Confronted with high prices and yet an urgent need to buy an apartment in a few years after graduation, many young Chinese turn to their parents for help.

In fact, most of Beijing residents aged between 20 and 30 rely on their parents to pay part or even full price of their new apartments.

Fang Zhou, from southwest China's Yunnan Province, is one of them. In June last year, her parents paid 800,000 yuan as down payment for her 60-square-meter apartment priced at 1.1 million yuan in downtown Beijing.

With a master degree in accounting, she landed her first job in a foreign company in 2007 and has worked there ever since.

"I couldn't have bought it without my parents' help," she said. "I can afford renting an apartment right now, but renting never gives me the sense of security."

Now, Fang pays the mortgage with one third of her income, leaving enough money for "living comfortably."

Housing had not been a big problem under China's old cradle-to-grave welfare system that provided free education, health care, housing as well as pensions.

In the late 1990s, the government launched a sweeping reform on housing, scrapping the government allocation of apartments to urban residents.

Since then, the real property sector has boomed. Strong demand and scarce urban land resources have driven up prices, as more people move to big cities to seek better educational and career opportunities.

In recent years, the prices have rocketed to be "abnormally" high as some experts believed.

Statistics from Goldman Sachs showed over the past six years, the housing price hikes had outpaced income rises by 30 percentage points in Shanghai and 80 percentage points in Beijing.

Yi Xianrong, a real-estate expert with the Institute of Finance and Banking of the Chinese Academy of Social Sciences, attributed the high prices to easy credit, property speculation and local government's lucrative land sales.

High housing prices are causing widespread grudge and depression among millions of young Chinese, who believe the prices are manipulated.

The intensity of this sentiment was revealed in "Dwelling Narrowness," a Chinese TV drama put on in 2009, in which one of the main characters becomes the mistress of a government official who helps repay her elder sister's mortgage.

The story follows the trials of two young sisters who struggle to buy affordable apartments in an unnamed big city, believed to resemble Shanghai, where house prices have soared beyond the lifetime disposable income of most wage-earners.

The 35-episode series had touched a raw nerve in its audience, who sympathize with the characters' moral and financial struggles.

"They epitomize a large group of urban young people tormented by material desire and anxiety in daily life," said Zhang Yiwu, a professor with the Peking University. "It's just like snails carrying a heavy shell."

But he added the urgency of young Chinese to be house-owners right after graduation is unrealistic and renting is a normal part of life that most young people in developed countries have to go through.

"On the one hand, the government should provide more affordable housing, but on the other hand the young people have to realize owning an apartment does take years of hard work," he said.

A native from Beijing's neighboring Hebei Province, 23-year-old Cai Yingfei, who now works in Beijing at a British supermarket company, seems not so eager to buy herself an apartment right now.

She lives with four other girls in a rented apartment, which costs one third of her 3,000-yuan monthly income.

"I don't expect to have my own house here in a few years. I set a goal of owning an apartment in ten years and I am working hard on it," she said.

In her rented small apartment, the sitting room was converted into bedroom and the master bedroom divided by a dry wall into two rooms to lower individual rent.

Zhang Rui enjoyed the sense of belonging after he and his wife poured all their savings of seven years into their two-bedroom apartment in Shanghai.

"The apartment is our shelter that gives me peace and comfort after a long hard day. I no longer worry about being driven out by my landlord and moving to another rented house in a rainy day, like what happened two years ago when I just got married," he said.

But as half of their 15,000-yuan income is spent on mortgage repayment, the couple face great financial pressure which they say is the main reason why they are still childless.

"We would lose everything if either one of us is laid off. We won't have a baby until we are better off financially," he said.

Aware of the high prices are eroding house-owning dreams of the young, the government said it would curb the rocketing development of the housing market and provided more affordable housing.

Many experts said the boom will continue as long as easy credit, land sales, and speculation are still around.

"I don't think young Chinese born in the 1980s will become a generation of 'mortgage slaves.' Their hard work will eventually repay them with an apartment," said Professor Zhang.

"If you want to have your own apartment sooner, move to smaller cities. The housing prices there are relatively in line with average income. It's less competitive there," he said.

About to leave Beijing where his dream started, Xue's feelings were mixed.

"I can finally give my family an apartment, but personally I think it is a setback in my lifetime," he said, lowering his head and staring at the ground.

Source: Xinhua
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