These gleaming Shanghai apartments stand as a symbol to many Chinese of social stature and stability. But the dream of home ownership is slipping out of reach for China’s growing middle class, as property prices continue to soar. 24-year-old Chen Jian is hoping to buy a property before he gets married at the end of the year, but he is dismayed by Shanghai’s rocketing prices.
I’ve started looking for a home, because I am about to get married to my girlfriend. I’ve been looking at properties for a while, and all I can say is that the price of properties is difficult to accept. I feel they are relatively expensive, the ratio of my personal income to that of the price you have to pay for the property is not very balanced.
The couple have calculated that the bank loan to buy an apartment would use up almost 70% of their monthly earnings, that’s compared to the 30-40% recommended in calculating housing affordability. In December last year, urban property prices rose almost 8% on year, the fastest pace of 2009. Beijing has responded to fears of an asset bubble by tightening monetary policy to help cap rising prices. Harry Wong, the head of a corporate consultancy in Shanghai says the government wants prices to grow steadily.
Government is not looking for low, very low property price. This is not their objective. And on the other hand, they don’t want a very high price that is chaotic and unaffordable. They want a steady growth, a very gentle slope upward.
China's parliament, the National People’s Congress, holds its annual session this week with focus on how to navigate the fine line between dampening growth and feeding an economic bubble.
Kirsty Basset Reuters |