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Shanghaiist is Shanghainese -- well, this one is -- but unlike many other Shanghainese in this city, we don’t actually own a tiny apartment. Our parents do, but we don’t live with the parents anymore.
Our friends suggested we buy an apartment in Shanghai because paying down mortgage is better than paying rent as the money eventually goes back to us (in theory). After some serious consideration, a few rounds puzzling over how exactly we would pay for our own apartment, we decided no go…for now. Why? Well, in this city, even a one bedroom “hole in the wall” goes for at least 600,000 RMB. Shanghaiist needs to borrow money just to come up with the minimum 30 percent down payment. Then, there are the mortgage payments, the interior decorating expenses and the rent we’d have to pony up for another place while our bathroom is being built, among other things.. . Grrrrr. If we bought an apartment, we’d always be thinking about saving money and paying it back for the rest of our lives. No more 58 RMB cocktails at Manifesto. What a horrible life! Well, according to this Sina's real estate analysis (news in Chinese), nearly 70 percent of Chinese citizens agree.
In that analysis, a survey conducted by People’s Bank of China in seven major Chinese cities, has shown that potential homebuyers’ willingness to purchase an apartment has dropped to a new low in 2006, especially in Beijing, Tianjin and Shanghai. Strangely, real estate prices in 70 major cities across China shot up 5.5 percent in the first quarter of 2006. So much for supply and demand.
Experts say this phenomenon means consumers’ desires are ignored by the market. Yi Xianrong, researcher for the Chinese Academy of Social Science pointed out that the real estate market in China is monopolized. The report also mentioned the 2006 Real Estate Regulation released by the National Development and Reform Commission. In it, the commission promised to address the issue of escalating home prices, work towards a healthier real-estate market and further expand current tax code to close out existing loop holes. We are aren’t waiting with bated breath.
So for this Shanghainese Shanghaiist, the quandary continues, so keep those pricey cocktails coming ... for now.
Photo from Sohu.com.
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uumm...rising prices dampening consumers desire to buy - what a conundrum!
I know, Paul, but I have to this again, "well, this is China."
Does being Shanghainese have any bearing on whether or not to buy real estate in Shanghai?
Don't you think the irony of being a native Shanghainese but couldn't buy a small apartment in her home town? I'm not sure how this works in Shanghai but Chinese tradition is it's important to have your own property.
Sadly, it stopped being an irony long time ago, ppl have all but resigned to the fact. Worse yet, in some corners of this city, ppl seem to display a rather perverse pride about locals NOT being able to afford to purchase a home, cuz what can be further proof that the city has indeed arrived on the international stage? I really can't argue w/ that logic.
Currently its better to rent.
Buying a place means 30% cash down.
Mean's monthly repayments. You still need to pay management fee's as well.
Your average 1 Million apartment will cost you about 7-8000RMB a month to service with fee's, mortgage and other ancilliary expenses.
You can rent a decent apartment in that range for +-4000.
It was worthwhile buying property a few years ago. I bought my first shack (ok, 内小房) in 2000. Sold that a year later, paid the rent for my next place up front for a year, and waited for the right apartment to come along. I bought the next one at the right time, and allegedly the price has doubled, although its not as easy to sell as the market would have you believe.
I've found and rented a suitable 1 bedroom in a central location for 1000RMB (although I had to spend a couple of days fumigating, painting and throwing out the landlords crap), so its definitely a renters market ;)
what's a 内小房, lawrence?
I heard that the down payment is 40% for ppl who are not Chinese citizens.
The real estate bubble is getting really out of hand, here. Young couples earning a combined monthly total of 13000RMB would buy a 2-million apartment! Of course their aged parents come up with the down payment......so basically, the real estate developers in China are robbing old folks of their retirement fund, in a government-sponsored, nation-wide scam.
You can also sense the curious rivalry with Beijing, when you chat with Shanghai-nese, many of whom seem to be proud of the fact that Shanghai housing price has made it far less livable than Beijing. How would Shanghai stay competitive like this?