Money

High prices still a big worry

By Shen Jingting (China Daily)
Updated: 2010-07-01 14:19

Beijing residents still think the capital's housing is too expensive, despite the government's efforts and tough rules aimed at cooling the run-away housing market early this year.

In a survey conducted by the Beijing Statistics Bureau during April and May, more than 98 percent of respondents described the price of the city's housing as "high" or "relatively high".

The survey quizzed 800 householders scattered across all of the city's urban and rural districts.

At the time of the survey, house prices were peaking. In April, the average cost of a secondhand home in the capital was 20,154 yuan per sq m. At the time, a very average 70 sq m home would sell for around 1.4 m yuan.

Since then, prices have started to fall.

The survey found that more than 72 percent of respondents owned property and that about a quarter of Beijingers were renters.

Despite the fact that most Beijing residents already owned homes, 45.8 percent of those surveyed said they hoped to purchase additional real estate.

The study found that about 22 percent of Beijing householders expected to purchase property within five years. Some 3.8 percent of families said they would consider purchasing in five years time. And 20 percent of families said they had not yet made up their minds about when they will buy.

Among those wanting to buy a new home, more than half said they expect to buy one between 70 and 100 sq m, largely because of financial limitations. Only 2.2 percent of families said they were looking for large homes with more than 150 sq m.

Only 30 percent of low and medium income families (which earn less than 80,000 yuan annually), said they were "completely satisfied" or "satisfied" with the government's policies. Among those earning more than 80,000 yuan a year, a mere 17.6 percent were satisfied.

The dissatisfaction is largely because of the so-called "sandwiched families" that are too well off to benefit from subsidized government housing aimed at low income families but too poor to compete with high income families purchasing property.

"Both rich folks and poor folks have houses (in Beijing). What is really frightful is that 'sandwiched people' cannot afford to buy one. They just sigh and dream about owning a house," said a business owner in Xuanwu district.

More than 60 percent of respondents supported the notion of the government reining in Beijing's housing market, but they also expressed concern about some rules.

For example, the government required banks to raise the amount of down payment needed by people wanting to buy a second home to a minimum of 50 percent of the property value. Previously, it had been 40 percent.

Some respondents said the rule could curb investment-led demand and help control the soaring price, while others argued that people who buy second homes were relatively cash-rich and would not care about the higher down payment requirement.

The rise and fall of property prices

The average price of secondhand properties in Beijing reached a record high in the first half of this year, but it is expected to drop around 10 percent during the next six months.

In a report issued by Beijing Homelink Real Estate Brokerage Co, a leading property agency in the capital, in the first half of 2010, the average price of secondhand property was 19,183 yuan per sq m, a jump of 62.8 percent over the same period last year.

However, it was a rollercoaster experience for Beijing's secondhand property market from January to June. In March, the average price soared by 2,004 yuan per sq m over the previous month, making it largest rise in history, while in May, the price plummeted by 1,549 yuan per sq m, the biggest fall in history.

The trading volume was down, however. There were only 98,000 secondhand units sold in the first six months, dropping from 101,164 units in the same period last year.

Fifty-eight percent of purchasers chose a one-off payment to buy apartments after the municipal government issued rules to rein in housing market in April, a 19 percent rise over the pre-policy number.

The report expected property prices would continue to fall in the second half of the year, decreasing by 9 percent to 13 percent over the first six months, the average price dropping to around 17,500 yuan per sq m.