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Mixed feelings abound as Beijing takes aim at soaring home prices

By Kou Jie (People's Daily Online)    16:14, March 30, 2017

Following the roll-out of a series of tough measures intended to curb skyrocketing home prices in Beijing, the public has offered a mixed reaction. Many support the policies as a remedy for unaffordable property, while others fear that such a sweeping approach may shatter their own dream of home ownership.

Within 10 days, nine policies aimed at curbing the city’s stubbornly high housing prices were launched, including higher down-payments, tougher eligibility requirements for non-residents and tighter control over purchasing of commercial housing. The capital’s strict new measures have caused a chain reaction across the country. Over 30 Chinese cities have followed suit, rolling out measures to tackle housing prices in a number of second-tier and even third-tier cities.

“The measures can be seen as a double-edged sword. They will undoubtedly put the brakes on the country’s housing frenzy and speculation, but they may also exclude many home-buyers from settling down in big cities,” Du Peng, a real estate consultant at Beijing-based real estate agency Lianjia, told the People’s Daily Online.

Unprecedented moves

“The measures were launched at a time when housing prices are rising rapidly in cities. They are necessary to cool down the overheated market,” said Du.

Beijing has experienced one of the greatest booms ever seen in a housing market, as prices have increased in inflation-adjusted terms by about 25 percent per year in the capital over the past decade, according to a report released by the International Monetary Fund in 2016.

Housing prices have long been a source of anxiety in China. According to a survey conducted last year by China Youth Daily, nearly 84 percent of young Chinese people struggle to afford property, with 58 percent saying that housing prices in first-tier cities are beyond their means.

Questionable legal situations have also arisen due to soaring prices. Since couples who are already homeowners are required to pay larger down-payments when buying subsequent properties, many couples have resorted to faking a divorce, allowing one partner to take advantage of the lower rate.

Experts believe that the news restrictions are tailor-made for such issues. For instance, one new restriction stipulates that couples who have already bought a house and been divorced for less than one year will not enjoy the advantage of lower down-payments.

“The new policies hit the bull’s-eye, closing loopholes and regulating multiple areas related to the housing market,” Ni Pengfei, head professor at the Center for City and Competitiveness under Chinese Academy of Social Sciences, told during an interview.

Echoing Ni, Du said the new measures are designed to curb speculation rather than stop legitimate buyers from owning a home.

“As the government has repeatedly stated, houses are for living in, not for using to speculate. I think the real estate market will now be more regulated, which is good for both developers and buyers,” Du said.

Shattered dreams

Though the new policies have generally been greeted warmly by the public, some have expressed discontent, arguing that certain restrictions are thoughtless and could harm the interests of honest buyers.

“The sudden policy change has thrown me into an abyss of depression. I was planning to buy a house this month, but under the current policies I am not capable of doing so despite years of planning and saving,” Fu Zeying, a 32-year-old engineer, told the People’s Daily Online.

Based on the new policies, Fu, who doesn’t own a house in Beijing, will nevertheless be defined as a second-home buyer, as he previously took out a mortgage in his hometown. The new policies have raised the down-payment requirement for second homes from 50 percent to at least 60 percent.

“My agency told me that under the new restrictions, banks will stop granting individual housing loans that extend beyond 25 years. Thus, I need to pay half a million more for my dream house,” Fu said.

The aspect that has been criticized most is the ban on commercial and office buildings used for residential purposes. Such buildings were previously one of just a few living solutions for those residing in Beijing without the city's household registration -- known as a hukou, as buying a commercial space doesn’t require a Beijing hukou or proof of tax and social security payments. Purchasing a residential unit, on the other hand, does require such proof.

“The new regulation says commercial buildings cannot be turned into homes for individual buyers, which means that a non-resident like me must either pay tax for 60 consecutive months to qualify as a buyer, or simply leave the city – there is no other option,” Pu Rong, a 27-year-old public servant, told the People’s Daily Online.

“I have studied and worked in this city for years, yet my dream of owning a home here has been shattered overnight. The frequent policy changes make me feel like I can never keep up with the government’s pace,” Pu added. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Kou Jie, Bianji)

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