Rac­ing against the clock

Search­ing for a new home in Shang­hai is not for the faint-hearted — home­buy­ers are con­stantly un­der pres­sure to find their per­fect home in the short­est time pos­si­ble so that they can beat the next spike in prop­erty prices

China Daily (Canada) - - SHANGHAI - In Shang­hai wang_y­ing@chi­nadaily.com.cn

Tim­ing is of the essence when buy­ing a home in Shang­hai, and pro­cras­ti­nat­ing for just a few weeks could mean the dif­fer­ence be­tween a dream home and a mere roof over the head.

Last Jan­uary, Yu Ting sold her two-bed­room apart­ment in Pu­tuo district for 2.5 mil­lion yuan ($360,000) be­fore set­ting aside 6 mil­lion yuan to buy a big­ger home in the more cen­tral district of Jing’an. Af­ter a few weeks of search­ing, Yu de­cided to take a break and head back to her home­town of Wuhan in Hubei prov­ince for the Lu­nar New Year.

As it turned out, the trip was a very costly one. Prop­erty prices in Shang­hai bal­looned af­ter the fes­tive pe­riod and an apart­ment in Jing’an that had cost less than 6 mil­lion yuan be­fore the holiday was now sell­ing for be­tween 7.5 to 8 mil­lion yuan.

As a re­sult, Yu ended up buy­ing a 200-square-me­ter villa for 6.6 mil­lion in Jiad­ing district. While that might sound like a rather good price to pay for a home of that size, the lo­ca­tion was not — she now spends three hours ev­ery day com­mut­ing from home to of­fice and back.

To ex­ac­er­bate mat­ters, the ed­u­ca­tion en­vi­ron­ment in their new neigh­bor­hood has proved to be un­sat­is­fac­tory. For Yu, a self-con­fessed “tiger mom” who wants her child to at­tend only the most pres­ti­gious schools, this is the most ag­o­niz­ing as­pect of all. In Shang­hai, where most par­ents pri­or­i­tize ed­u­ca­tion over ev­ery­thing else, many have de­lib­er­ately re­lo­cated just so their chil­dren can at­tend a good school.

Un­der China’s nine-year com­pul­sory ed­u­ca­tion sys­tem, which con­sists of six years of pri­mary ed­u­ca­tion and three years in a mid­dle school, stu­dents can only be en­rolled in the school that is near­est to his or her home. In the rel­a­tively re­mote Jiad­ing district, well-known schools are scarce.

Zhou Qiong is one such par­ent. For­merly a res­i­dent in Min­hang district, the 29-year-old said that she had started look­ing for a new home as soon as her daugh­ter turned 1 as the pre­vi­ous lo­ca­tion has very few qual­ity schools. Af­ter view­ing nearly 60 apart­ments in six months, Zhou sold her Min­hang apart­ment in Oc­to­ber for 6 mil­lion yuan be­fore set­tling for a new home in Xuhui district that cost 8.3 mil­lion yuan just two days later.

The ex­pe­ri­ence of look­ing for a new home, said Zhou, was such an ex­haust­ing af­fair that she “doesn’t even dare think about it again”.

“I be­lieve that the home prices in Shang­hai will con­tinue to grow see­ing how Shang­hai's am­bi­tion is to be­come a city the likes of New York and Lon­don by 2040. When more and more peo­ple work and live in Shang­hai, the price gap be­tween prime res­i­dences and av­er­age homes will be­come larger in the years to come,” said Zhou.

Lu Wenxi, a se­nior re­search man­ager from Cen­taline Shang­hai, said that nearly 14 mil­lion sq m of newly built res­i­den­tial prop­er­ties were traded on the mar­ket through­out 2016, in con­trast to the av­er­age an­nual trans­ac­tion vol­ume of around 10 mil­lion sq m in the pre­vi­ous years.

“In the past, most of the peo­ple buy­ing prop­erty in Shang­hai were first-time buy­ers who needed a home. To­day, the ma­jor­ity of home­buy­ers are those who al­ready own prop­er­ties and are look­ing to up­grade or in­vest,” said Lu, who added that the av­er­age cost of new homes in the city had soared nearly 20 per­cent year-on-year in 2016.

Xie Chen, head of CBRE re­search China, noted that the last round of home price hikes was in the sec­ond half of 2014 and prices had con­tin­ued grow­ing un­til last year when the govern­ment im­ple­mented three rounds of tight­en­ing mea­sures in March, Oc­to­ber and Novem­ber.

“The re­cent spikes in home prices have ex­ceeded ra­tio­nal ex­pec­ta­tions and have gone be­yond the tol­er­ance level of the au­thor­i­ties. Hope­fully the tight­en­ing mea­sures will be ef­fec­tive in cool­ing the mar­ket,” said Liu Tianyang, gen­eral man­ager of Cen­taline Shang­hai and the vice-pres­i­dent of the com­pany’s Chi­nese main­land op­er­a­tions.

While some home­buy­ers may have heaved a sigh of re­lief fol­low­ing the im­ple­men­ta­tion of the cool­ing mea­sures, oth­ers like Wang Huiyao were left ex­as­per­ated. On March 25, 2016, when the first batch of new mea­sures — one of which stip­u­lates that home buy­ers must have paid taxes in the city for at least five years — took ef­fect, Wang in­stantly be­came in­el­i­gi­ble to buy a home. She and her hus­band had only moved to the city in 2012.

But for those who al­ready have the funds in hand and are just wait­ing for the right time to buy a home, ex­perts said that prop­erty prices are ex­pected to drop this year.

“Lat­est data col­lected from the sec­ondary home mar­ket shows that trans­ac­tion vol­ume and ask­ing prices have al­ready been de­clin­ing. We be­lieve that this year may be a good time for first time home­buy­ers. It might take be­tween 12 and 18 months be­fore the home prices bot­tom out,” said Xie.

YANG YI / FOR CHINA DAILY

Peo­ple queue at a prop­erty trad­ing cen­ter in Baoshan district in March to have their home deals pro­cessed be­fore the new cool­ing mea­sures kick in.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.