Sizzling property prices have provided the much-needed prop to the nation's economy but at the same time proved a bane to most of the end users as they have turned too pricey, according to industry experts.
So much so that owning an apartment in most of the major Chinese cities is slowly becoming a dream as the skyrocketing prices have made realty virtually unaffordable.
For many like Kong Lin, a furniture salesman, it has really become a matter of grave concern. The Bejing resident is frustrated and depressed as his girlfriend has threatened to leave him if he is not able to acquire a flat by the end of the year.
And that is a daunting task, says Kong. To buy an 80-sq-m apartment in Bejing within the Fourth Ring Road, he needs to cough up 1.5 million yuan, or at least make a down payment of 450,000 yuan, and pay the rest in monthly installments of 6,000 yuan spread over the next 30 years.
But with his monthly emoluments just around 7,000 yuan, he just cannot afford to buy a place of his own.
Kong's problems are manifest in most of the other Chinese cities also after the recent increase in property prices.
The total property value in the country could touch 90 trillion yuan at present, triple the country's total GDP on a cumulative basis, according to China Securities Journal.
Analysts said the government would find it difficult to cool the hot property as it is the mainstay of the economy.
The total city residential construction area stood at 15.6 billion sq m in 2006 according to statistics from China's National Bureau of Statistics.
Newly added construction area in 2007 and 2008 according to Wind.com.cn reached 1.38 billion sq m, while total residential sales crossed 490 million sq m so far this year.
If one were to add all these three figures, the total construction area of urban residential housing could be estimated at around 17.5 billion sq m. And if one were to multiply it with the average price of 4,312 yuan per sq m, the total value of the country's urban residential housing could be around 75.5 trillion yuan.
The newspaper also used the same method to calculate rural residential housing and estimated it at 15.9 billion yuan.
The total residential housing value of the entire nation could reach 91.48 trillion yuan, tripling the nation's total GDP of 31.4 trillion yuan on a cumulative basis.
"China's property market has gone through staggering rates of annual growth for almost a decade. So it is no wonder that the total value will triple the country's GDP," said Zhu Lixu, deputy director of Shanghai Youwei Property Research Center.
He said residential housing prices in first-tier cities like Beijing and Shanghai have risen fourfold in the past five years. In some third or fourth tier cities, prices have nearly doubled, he said.
"The property game is not sustainable. Local governments kept high fiscal revenue by selling land to property developers at high prices, pushing up the housing prices. And that situation also keeps low or average income residents away from buying homes. So China's property market is more driven by rich investors rather than the relation between market supply and demand," said Li Daokui, dean of the Department of Finance of Tsinghua University.
"Although the real estate sector has become a mainstay of the country's economy, the government must do something to alleviate the burden of low and average income families who cannot afford to buy homes," he said.
He said the government should allocate an amount of funds to start construction of affordable housing for low-income families.
(China Daily September 16, 2009)