Homeowners play hardball as prices rise

Despite booming real estate prices in Beijing, Wang Ke, a 32-year-old bank clerk, recently bought a 98-square-meter apartment near the city's Third Ring Road.

"Demand (for homes) has been strong," says Wang, who is three months pregnant with her first child. "My parents will help in looking after the newborn baby as my husband and I both have to work. The current 60 sq m apartment with only one bedroom and one living room is too small for the five of us."

The couple had been considering buying a more spacious home since last year, but they waited in the hope that the policy environment would ease prices.

That was not to be. Instead, the average price of a new home in Beijing, like in other first-tier cities, has kept rising due to robust demand. Finally, the couple gave up and settled for the Third Ring Road apartment.

"It's crazy. The price of a 100 sq m home has risen 300,000 yuan ($45,700; 42,000 euros) within two weeks after the Lunar New Year," Wang says. "With the baby on the way we just couldn't wait any longer and had to go ahead and buy, as we need to finish the imrovements and move in before November."

Even if young buyers - flush with easy loans and financial help from their parents - are willing to buy, they may not succeed, as many homeowners are holding on to properties due to signs of a recovery in China's residential property market.

"We almost sealed a deal with a homeowner for a 108 sq m apartment near the eastern Fourth Ring Road, but he suddenly withdrew two days before an arranged meeting," Wang says. "We even paid an advance deposit to the real estate agency, but the homeowner violated the agreement."

Wang says she has heard of many such cases because homeowners, sensing rising demand, are playing hardball.

"Our realtor said some residential developers have already increased their project prices, which is making homeowners even more reluctant to sell."

That's a far cry from 2014, when demand was weak amid a supply glut. However, recent stimulus in the form of cuts in deed tax and business tax has brought about a turnaround in first-tier cities.

zhengxin@chinadaily.com.cn

(China Daily European Weekly 03/04/2016 page27)