Home sweet headache

As property prices continue to soar, young people agonize over whether they can afford to take the plunge and buy

A 2 million yuan millstone hangs around the necks of Wu Jian and his wife - and yet they consider themselves lucky. That amount, equivalent to $290,000 (264,250 euros; ￡224,250), is how much Wu, 28, of Beijing, and his wife owe a bank and their relatives after they borrowed money to buy a 60-square-meter apartment in the city last winter.

If the couple were on an average Beijing salary of a little less than 10,000 yuan, and each contributed half their pay toward repayments, they would finally discharge their debt by around 2035. However, that calculation ignores any interest they may pay, which could stretch their burden by quite a few more years.

However, Wu says he feels he had no choice but to buy into the Beijing real estate market.

The average price of a home in Beijing grew from 56,000 yuan a square meter in October to 63,000 yuan a square meter in March, an increase of about 12 percent. Photos Provided to China Daily

He bought the apartment because he was getting married, he says, and his wife is now expecting a baby. In fact, he had not expected to buy a house so early because the deposit, 1.5 million yuan, would usually be far too much for a couple under the age of 30.

"The baby is due soon and we wanted to stay in Beijing, so we just had to," he says.

One reason Wu and his wife consider themselves fortunate to have got on the housing ladder is that since they bought their home, housing prices in the capital have continued what seems to be an inexorable rise.

The real estate agent fang.com says the average price of a home in Beijing grew from 56,000 yuan a square meter in October to 63,000 yuan in March, an increase of about 12 percent.

By contrast, Zhilian Recruiting, a China-based website, says that between winter and spring, the average salary in the capital rose from 9,835 yuan to 9,942 yuan, an increase of 1 percent.

What this means is that buying a home in Beijing is increasingly out of the question for many young people unless their parents, or even grandparents, help them financially and they borrow from relatives and friends in addition to banks.

Beijing had a population of 21.5 million in 2014, the Beijing Statistics Bureau says, about a third of whom were aged 20 to 34, and many of them attended local universities there or in other cities. They are some of the most talented people the city has.

Haidian district, in the city's northwest, is often cited as the epitome of the housing affordability problem. Exorbitant prices and continuing increases are driven, to a large part, by parents keen to have their children attend top primary and middle schools in the area and increase their chances of being accepted by top universities such as Peking, Tsinghua and Renmin, which are all located in the district.

An anecdote recently making the rounds tells of a taxi driver and a passenger getting into a conversation about the price of housing, whereupon the driver puts this paradox to his passenger: If graduates from the likes of Peking University and Tsinghua University do not earn enough to be able to afford a house in Haidian, then why bother buying one?

Many of those who have read this account online have given a nod to the taxi driver. Public resignation to the idea that there is no stopping the price rises has given way to bleak pessimism that, for young people from middle-class families on just average incomes, homeownership will forever remain a pipe dream.

Wu Nan, 28, a journalist, says: "People, especially friends and relatives back in my hometown, use housing as a gauge of your success. If you don't own a home, you are regarded as a loser. Added to which, a man like me is disadvantaged in the marriage market."

All this raises the question of whether anyone wanting to start a family will be forced to leave Beijing. If they opt to stay, will these people be so preoccupied with making ends meet that they have no time or passion to improve society in the many different fields in which they are engaged?

In short, will soaring housing prices suck the vitality out of the nation's capital?

The Wu couple say they are not bothered about the impact that debt will have on their careers and their lives generally.

"So that we can pay off the debts to our relatives as soon as possible and save enough money for unexpected situations like unemployment, we will spend less on entertainment, such as dinner parties and movies," Wu says.

"Another thing is that we cannot quit our present jobs unless we have something else lined up. That's the kind of freedom we have lost by buying the house, but it means our baby can grow up in a stable environment, and for that it's well worth the price."

In any case, "constantly changing houses is a bad thing for children", he says.

As for employment, Wu says salary is just one important element, another being whether a job fits into a lifelong career.

Gwen Zhu, 31, says the Wu couple are undoubtedly very lucky, and certainly a lot luckier than she is.

Zhu, from Jiangxi province, entered the Institute of Remote Sensing and Digital Earth, part of the Chinese Academy of Sciences, in 2009, aiming to obtain a doctorate and eventually embark on an academic career.

Staying at the institute would also have given her the possibility of obtaining the hukou, or registered resident permit, she says.

However, in 2010 she changed her mind about her career path, based mostly on how little she would be paid if she worked in academia, she says. So after graduating she joined a fund company in Beijing, where she trained in the field of communication stocks.

The Beijing government, as part of measures to control the price of housing, now demands that buyers possess the hukou, in the absence of which they need to have worked in Beijing and paid social security contributions for a minimum of five years. But relying on that rule would have been futile for her, Zhu says, because in five years rising prices have pushed housing increasingly out of her reach.

"I really should have tried to get a job at the institute so I could get a hukou. But the pay was too low and it's especially difficult to achieve academic success in China. Anyone who aspires to become a scientist is more likely to choose to go to countries like the United States, where an ordinary research scientist can live a reasonable life on a decent income."

One of her fellow senior students at the Institute of Remote Sensing and Digital Earth got a position there after graduating with a master's degree, but she quit recently and began working for Homelink, the largest real estate agent in China, selling houses, which "really shocked me", Zhu says.

"It's not easy for a student with only a master's degree to get a position at the institute. She is outstanding, but the salary is too low, especially when you look at soaring housing prices."

For Zhu, continuing housing price increases point to class solidification in Beijing, meaning that the less well-off will be excluded.

"It has become normal that graduates from Peking and Tsinghua universities cannot afford a house in Beijing. There are many good universities in the city, but not every graduate can stay here. The bar is rising."

Those aged above 30 who have started thinking about starting a family but cannot afford a house will have to move to other cities, Zhu says.

In 2015, Zhu Hangtian, now 33, resigned from his position as an administrative staff member at a university in Beijing to take up a position at a superconductivity research center at the University of Houston in Texas.

However, the two-year contract for that position ends in October, and Zhu has begun to fret about his future.

"Perhaps I will try to stay in the United States, because housing in Beijing is just too expensive. There seems to be nothing you can do about it.

"In Houston, even on an ordinary kind of salary you can buy a house in several years and maybe another later, and I hope to live with my parents-at least in the same city-to look after them. But in Beijing, it's completely impossible."

Du Debin, a researcher at the School of Urban and Regional Science at East China Normal University in Shanghai, says the attraction of cities such as Beijing and Shanghai is their abundance of creativity, educational institutions, opportunities for doing research, the availability of skilled people and progressive companies.

The resulting demand to live in those cities then helps push up the price of housing there. That benign cycle turns malignant as housing becomes unaffordable for many and talented people are forced to live elsewhere.

"In that case, it turns out to be a good thing for the development of other cities, as with the economic integration of Beijing, Tianjin and Hebei," Du says.

yangyang@chinadaily.com.cn

(China Daily Africa Weekly 05/12/2017 page18)