Living in Shanghai: Buy or rent?
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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