The Sky High High Rise

New regulations out this week mean I could buy my own home in Beijing. These rules are specific to foreigners and seem to be part of a series of measures to try to cool the property market in China.

How effective can all these measure be? Is China seeing a property bubble? Or is it just encountering the consequences of decades of pent-up demand and years of saving?

The new rules for foreigners specify, among other things, that a prospective buyer must have lived in China for at least a year, be studying or a resident. Which enables me to remain in the market. And to buy the house I rent down a central Beijing hutong (alley) should I -- and the owner -- so wish.

The China Daily had a lengthy report on the new rules, which seem to be of almost negligible importance compared with recent regulations to try to curb property speculation among Chinese buyers. The latter, naturally, account for the vast, vast majority of all house and flat shopping in cities.

In the first five months of the year, the average housing price in 70 major cities rose 6.1 percent from a year earlier. The biggest increases were in the northeastern coastal city of Dalian, a popular summer seaside resort, and the southern boomtown of Shenzhen on the border with Hong Kong. Prices there rose by more than 10 percent.

Cities like Beijing are spreading outwards, devouring agricultural land in the suburbs and creating enormous sprawls of faceless towering apartment blocks. At least they seem faceless and characterless on the face of it -- as it were. But if you are a Chinese who has lived for years in state-owned housing with miniscule kitchens, raw concrete floors and rudimentary sanitation it's much easier to understand the stampede to own your own home -- and to do it up.

And for a sense of the construction frenzy take a look at satellite images, courtesy of the United Nations Environment Programme, that show Beijing in 1978 and in 2000.

So, despite recent regulations to curb speculation among Chinese buyers too, people can now swap this 

for this.

And people are queuing up for the chance. A little like the southeast of England, or London, I suspect. Although even with plenty of new property coming onto the market, demand seems insatiable.

There may not be so many who want to stay in Beijing's ancient alleys where few homes have indoor bathrooms and the public toilet is a place to gather and gossip. It may seem romantic and atmospheric but can be grimy and uncomfortable. But there is an irreplaceable air of community -- and of knowing everyone else's business. Still, I'm not ready to swap my alley home. But I'm not sure with prices rising so dizzyingly that I could ever afford to buy it.

Comments

[chris Stevens]

Thank you for the report, I did not realise that they had changed the rules- not that it will make a lot of difference to most foreigners as few who would only stay here for one year would actually buy a house. I have heard of companies that are trying to organise house buying trips to China for UK residents as an investment opportunity so this will surely stop that.

Overall I think this is a good measure although it is unlikely to have much of an effect, surely one could get round it by buying through a company, buying through a Chinese friend ( although it would have to be a very trusted one) or buying through a Chinese wife if you have one. Most of the landlords I have had in China have been Chinese women married to Japanese men- they tend to do the houses up with much better equipment and prefer to rent to foreigners as they think we look after houses much better.

Any measures to cool the property market have to be good as prices are crazy- having said that, a friend of mine just paid 300k for a 1 bed flat in London, for the same money you could get a 3 or 4 bed high floor flat in any of the best developments in Beijing so we do not have it so bad after all.

There had been a lot of rivers, lakes,ponds and rice fields in Beijing 30 years ago when am I in middle school.

[Yu Zeng]

It is funny though to set different rules for foreigner and natives. But we could understand the estate agency are ready to sell the property to whoever in the interest of promotions.

Its only the same land under different package, I wouldn't think of buying house in the central area at least before the 2008 Olympics, which could be a push behind the scene.

[Ralph in NW Sichuan]

I found Chris's comments confusing as why would I curcumvent the rules by buying through a third party? The new rules state we foreigners can buy property ourselves.
My wife recently bought a flat in her name after we sold one in the city centre but also using my income here in Mianyang.I feel relatively safe with the Chinese divorce laws protecting me if......
Mianyang is the third most desirable city in China to live with Dalian number one. Property is on the rise but seemingly half of the new flats remain unsold.
Our new flat is 310m2. It has 3 small balconies and a 55m2 garden balcony with views over the woods and temples of a large hillpark. 6 bedrooms and 4 bathrooms and another 6 rooms.The layout over the 2 floors is excellent.
How much to buy? It was subsidized to police families which my wife can claim as her Father was a former senior policeman....300000rmb and we can resell for 500k even though it is still a shell.Remember that here in NW Sichuan the cost of living is about 50% of the richer East. How much in a similar city such as Bristol? 1 million pounds when decorated? It is obvious that position plus design is all-important when selling or buying. Everyone of the perhaps 800 flats in our complex are sold including the 4 like ours.
We have not bought as an investment but mostly for the space and garden. We plan to be here 'til the next chaos.

[Chris]

I have been living in Suzhou for a couple of months (first time in China). Here apartment blocks are being built like there is no tomorrow and there are a lot of empty completed flats which I suspect the locals cannot afford.I think the area is a property crash waiting to happen!

[Phillip]

I found your article, "Play turns spotlight on China's hidden history" about Zhang Guangtian's new play in Beijing quite interesting. Most striking is that not only has the play evaded the censors, but that according to your article it is "produced with the support of the State Environmental Protection Administration" (SEPA). How can a play that is so obviously critical of Chinese culture and government economic development strategies gain the support of a government agency? Perhaps you could elaborate on what you mean by "support". Has SEPA provided financial backing or is the support more tacit?

[Chris Stevens]

Ralph, just to clear up, the rules actually say that now foreigners are only allowed to buy a house to live in and to buy a second house requires approval from the government. You would only buy through a third party if you wanted to buy several houses as an investment- otherwise, you are quite right, foreigners are still allowed to buy a house to live in.

The landlord of my office in Beijing is an Italian chap who owns 30 similar properties, which he rents out to foreign companies. The new laws are designed to stop others doing the same and pushing up property prices.

I used to live in Dalian, and indeed still have a holiday home there which i sadly use too infrequently. House prices there now rival Beijing, but it is a lovely city. I am very jealous of you being able to buy a house in Mianyang for that price, you would be lucky to get 20 sq metres for that in Beijing! I am sure Mianyang is a wonderful place to live, but i have a suspicion i would find it hard to get a job there!