BEIJING: Shou Zhenwei, a 28-year-old state-owned company employee in Beijing, paid 1.4 million yuan (US$205,000) for a two-bedroom apartment this month, realizing a long-cherished dream.
The price was 400,000 yuan higher than Shou's budget at the beginning of the year, but he and his fiancee, Sun Hua felt they should buy quickly before prices went up further.
The Impossible Dream
Shou's home outside Beijing's northern second ring road is less than 70 square meters, which equates in value to more than 20,000 yuan per sq m for the second-hand apartment built two decades ago.
That works out at two months of Shou and Sun's total gross income for each square meter.
"We have only worked for two years, so we don't have much saved. We want to get married next year, so we had to borrow 600,000 yuan from parents and relatives for the downpayment," Shou says.
Sun works in an export-oriented firm and sagging export demand resulted in smaller paychecks this year.
"I feel uncomfortable borrowing so much hard-earned money from parents and relatives, but we have no other alternative in the face of increasingly rising home prices," Sun says.
The 4,700-yuan monthly installment going to the bank for the next 20 years is almost half of their combined income.
"We wanted to wait for prices to stabilize, but we worried that prices would climb even higher," Sun says.
"Many of our young friends are borrowing money from parents for downpayments, working hard and cutting corners to buy homes. For those who come from rural areas and whose parents cannot give them much financial help, buying a home is an unattainable dream."
The couple's story is common as home prices have gone through the roof since they began to pick up in February.
Average prices of second-hand homes in Beijing have soared 49 percent since the beginning of the year to around 16,100 yuan per sq m at the start of this month, says Qin Rui, a senior analyst with Beijing-based 5i5j Real Estate Service.
"There are some bubbles in the home prices, as many home buyers find the prices in big cities too high," Qin says.
Home, Land Rates Rise
Figures from the National Bureau of Statistics show home prices in 70 metropolitan areas, including Beijing and Shanghai, rose 3.9 percent in October from a year earlier, the fifth consecutive monthly spike.