Since the housing reforms in 1998, China’s real estate industry has entered a stage of rapid development, and housing conditions in urban areas have been greatly improved. Since 2004, however, due to changes in the land transaction methods, housing prices in cities have soared.
“I want to have a home, a place that need not be fancy, a place that I long for when I’m tired. I want to have a home, a place that need not be big, a place that makes me feel safe when I’m scared …” This song, I Want to Have a Home, is one that Chen Xiaoping often finds himself humming.
Chen Xiaoping, who has lived in Beijing for 3 years since he graduated from college, will soon bring to fruition the long-time courtship between him and his girlfriend. Chen is looking forward, of course, to the sweetness of married life in a small family. However, he is also experiencing troubles related to starting a family, all of which have their roots in one thing: housing.
Chen Xiaoping is a native of Jilin Province. He currently works at a privately owned company in Beijing, for a monthly salary of 6-7 thousand yuan. He used to think that a life like this was “not bad”.
Since his family doesn’t live in Beijing, Chen Xiaoping has been living in rented apartments ever since he started working in Beijing. In three years, he changed apartments 5 times, 2 of which were because he wanted to move closer to a changed work place, while the other 3 times were because the landlords wanted him to move. As housing prices soared in Beijing over the past three years, Chen Xiaoping’s monthly apartment rental expense has increased from 1000 yuan to 2500 yuan. Luckily, his company pays its employees a monthly housing allowance of 1500 yuan, a significant relief to Chen’s financial stress.
Although Chen Xiaoping will complain about the pains of having to change apartments, the optimist in him sometimes brings him to “quite enjoying” such changes. He sometimes says to his friends: “Renting allows you to pick a place that’s close to your work. You don’t have to waste a lot of time on the daily commute, the way you’d have to if you worked in the west side of the city but lived in the east side.”
Now, however, that Chen Xiaoping is going to get married, buying an apartment has inevitably found its way into his agenda. It has, in fact, become urgent for him to buy a suitable apartment.
Live in peace and work in contentment
In China, there is this set phrase: “Live in peace and work in contentment”. In traditional Chinese thinking, you don’t have a home and don’t feel settled until you own a house. For most people, expectations and imaginations of the future are all based on home ownership; Chen Xiaoping is no exception.
The girlfriend, the parents on both sides, and even Chen Xiaoping himself all hope that the two of them can have an apartment of their own when they start a family.
When thinking about this, Chen Xiaoping often finds himself in envy of his parents’ generation. They lived their younger years in a planned economy, where their college assigned them a job and their work unit assigned them an apartment as an employment benefit. This meant less freedom to make choices, for sure, but it also meant less pressure in life.
Chen Xiaoping’s home, or rather that of his parents, is a two-bedroom apartment of about 100 square meters. It was assigned to his father in 1980s by the research institute at which he worked. Chen remembers that, considering his father’s length of employment, position, professional title and the number of people in the family, the institute allowed his parents to buy the apartment for only a few tens of thousands of yuan. Now this apartment, in prime location, has a market value of at least 800 thousand yuan.
In 1998, as China pushed nation-wide reforms of the urban housing system, putting an end to housing allocation, employment benefit housing as a form of housing welfare became history.
One article has said: “If the ‘Household Responsibility System’ instituted in rural China in the early 1980s shaped the country’s economic reforms and development, reforms of the urban housing system not only have made possible the modes and ideas of modern living, but also will affect our living at a deeper level.
Naturally, the Post-’80s Chen Xiaoping didn’t “catch the last bus” of welfare housing.
Chasing dreams in the commercial housing market
Once, Chen Xiaoping narrowly missed getting an apartment.
It was right after Chen Xiaoping had started to work, when housing prices in Beijing were much lower than now. At that time, his parents were ready to pool the whole family’s resources to buy their son an apartment in Beijing. Chen Xiaoping, however, turned it down.
Some old classmates, from relatively well-off families, had already bought an apartment with the help of their parents (In China, many parents use their life’s savings to help their children buy a home). However, the stubborn Chen Xiaoping didn’t want to be a “twixter”; he wanted to realize his dream of owning a home through his own means. He had always believed that, given his ability, owning a home was only a matter of time.
In fact, there are quite a few such “role models” in Chen Xiaoping’s circle. One of them, a fellow native of Jilin Province and also Chen’s senior at college, bought an apartment of 90 square meters on a loan after working for 5 years. When Chen Xiaoping walked into that apartment, a neat and bright two-bedroom, he told himself, “Be hard-working! See to it that you’ll buy your home on your own!”
Back then, Chen Xiaoping felt lucky to live in a market economy, where he could work hard to make a living and realize his dream of home ownership, instead of waiting to be allocated an employment benefit apartment of a predetermined size, the way it had been for his father’s generation.
Statistics show that, since the housing reforms in 1998, China’s real estate industry has entered a stage of rapid development, and housing conditions in urban areas have been greatly improved. Over the past 10 years, residential construction in urban China has reached 6.5 billion square meters, or 28 square meters construction area per capita. Since 2004, however, due to changes in the land transaction methods, housing prices in cities have soared.
When will the home ownership dream come true?
Walking among rows upon rows of high-rises, looking at the orange light glowing through their windows at night, Chen Xiaoping has a sinking feeling that defies description.
With 200 thousand yuan which he and his girlfriend have saved up, Chen Xiaoping has been busy for more than two months looking for an apartment to buy. He doesn’t know how many apartments he has looked at. The truth is that the money he has is pitifully insignificant given the staggering housing prices.
According to statistics from the Beijing Statistics Bureau and the National Bureau of Statistics Beijing Investigation Task Force, forward delivery prices for commercial apartments reached 35 thousand yuan per square meter during the period from January to July this year.
So, an apartment of 60 square meters sells for almost 2 million yuan. A 20% down payment would mean 400 thousand yuan, and a loan of 1.6 million yuan would mean that, on their current income, Chen Xiaoping and his girlfriend would have to save money for 10 years even if not a penny of their income were spent.
Because of the high prices for commercial housing, Chen Xiaoping has considered buying a “two-limit apartment” (commercial apartments whose prices and the price of the land on which they are built is limited by the government) or an economy apartment (social security type of commercial apartments available only to urban households of low to medium incomes).
Unfortunately, Chen Xiaoping and his girlfriend’s combined income exceeds the maximum income for eligibility. The “sandwich layered” Chen Xiaoping can only “sigh at the sight of these apartments”.
However, amidst his disappointing house-hunting trips, Chen has also heard good messages. China’s State Council issued a Circular to Curb Excessive Rises of Housing Prices in Some Cities, putting forward 10 measures, which have become known in the real estate industry as the “Ten New State Measures” concerning the real estate market. Then, local governments also began to take a series of measures to regulate the real estate market, including limiting the number of properties people can buy, tightening the approval process for mortgage loans, and speeding up construction of social security type apartments. As the soaring housing prices show signs of loosening up, Chen Xiaoping has a new hope of achieving his dream of home ownership.
It is Chen Xiaoping’s earnest hope that these government control measures will be able to demonstrate their “mighty force” and bring closer the day when the housing prices are adjusted back to within a reasonable range, the day when his dream of owning a home is realized. “It doesn’t need to be really big; it only needs to be big enough for two people. It doesn’t need to be fancy; it only needs to be cozy.”
Published in Confucius Institute Magazine
Magazine 15. Volume 4. July 2011.
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