Shall we, shan't we now, that is the question
Updated: 2008-01-18 07:23
To buy or not to buy, that is the question haunting Yang Qi.
The 30-year-old white-collar worker has had plans to buy a house in Beijing for some years now. But just when she was about to decide on an apartment off East Fourth Ring Road recently, a TV program caught her attention.
 An artist puts himself in the stocks at a housing trade fair in Beijing to protest against rising property prices. His idea is to show that people have become slaves to housing prices. [China Daily] |
The chairman of China's top property developer Vanke was asking potential buyers not to buy houses in the next three to four years because the market was reaching a turning point. The suggestion: Prices could fall.
"There has to be a problem with the property market if the middle class cannot afford to buy an apartment," Wang Shi told CCTV. And true to his suggestion, Vanke cut the prices of its housing units in Shenzhen, Guangzhou and Shanghai by 15 to 30 percent.
Does that mean property prices are falling? It's too early to say. As Cao Changqing, director of National Development and Reform Commission's (NDRC) pricing department said in an online interview in December, it's difficult to say whether a fall in property prices in some cities is a temporary phenomenon or a long-term trend.
"If the turning point is really coming, it would be worth the wait even though I need to buy a house before I get married," says Yang. "But I'm afraid property prices in Beijing will pick up again if I wait for several months."
Yang's fears are not unfounded because NDRC and National Bureau of Statistics (NBS) figures, released Thursday, show housing prices in 70 big and medium cities rose 10.5 percent year-on-year in December.
Reform of the property market is the second most important social issue for urban residents, says the Chinese Academy of Social Sciences' annual report on social development. Housing is more of a problem for families with a monthly income of 5,000 yuan ($688) or more, says the report, "Society of China: Analysis and Forecast", which is based on in-home surveys in Beijing, Shanghai, Guangzhou and other cities, and towns and villages.
High-income families are the biggest beneficiaries of soaring property prices. The reason: they are not so sensitive to price rise, down payments and mortgage rates because of their strong purchasing power. Hence, it's easier for them to make money by speculating in the property market.
Middle-income families, in contrast, are the biggest victims because they are desperate to buy a house but cannot afford one because of continuously rising prices.
Low-income families suffer, too, because they are not covered by an affordable or low-rent housing system, and most of them see their lifetime dream of buying a house vanishing each time prices rise.
Most homebuyers like Yang are facing a dilemma, for despite the rise in housing prices in December, there have been signs of cooling down in the property sector after double-digit growths in the past several months. Even NDRC and NBS said Thursday that the pace of price rise had fallen a little.
Some figures, however, leave potential homebuyers puzzled because they simply don't know what to and what not to believe, with confusing data of rising and falling prices at the same time.
Prices fell, but where? Shenzhen was the first to see a drop. Pre-owned house transactions in the southern city fell 36.8 percent in September, with the price dropping as much as 47.1 percent compared to August. The average sale price of new houses was 14,797 yuan ($2,040) per sq m in the city in October, a 10 percent drop from September.
Shanghai's property market, too, has cooled down since mid-November, dropping 50 percent from the first half of last year to below 600 apartments, according to the China Real Estate Index System.
Beijing municipal construction committee statistics show the average price for the 45 new residential buildings dropped 358 yuan ($49) to 14,966 ($2,064) per sq m in November, the first time the capital's property market fell in six months. According to China Real Estate Index, Beijing's average property price dropped from 15,162 yuan ($2,090) per sq m in November to 12,180 yuan ($1,680) per sq m in December.
But wait before drawing any conclusion. The drop in price we are talking about here is from November to December. But NDRC and NSB data show housing prices in Beijing actually rose 17.5 in December year-on-year. So where does that leave the buyer? In a sea of confusion. And that's precisely why so many homebuyers want to wait and see.
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