House prices skyrocket in Beijing's school districts

By Li Jingrong
0 Comment(s)Print E-mail, March 3, 2017
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Cartoon showing a Chinese family bearing huge financial pressure for a house purchase in a school district. [Photo / The Economic Observer]
Cartoon showing a Chinese family bearing huge financial pressure for a house purchase in a school district. [Photo / The Economic Observer]

Mr. Xiong (a pseudonym) recently spent 12 million yuan (about US$1.75 million) purchasing a 39-square-meter apartment in downtown Beijing at the price of 250,000 yuan (about US$36,394) per square meter. He was willing to make the deal as he wanted his child to go to a nearby good school.

The Hongmiao Primary School, located nearby the Financial Street of central Xicheng District, is among a series of local elite schools widely recognized by students and parents.

With its growing popularity, house prices in the district have soared over the past few years.

Nowadays, many parents in Beijing don't hesitate to buy wildly expensive houses to get their children to elite schools. This education fever is behind the skyrocketing house prices in Beijing districts like Xicheng and Haidian, the Economic Observer reported.

"It wasn't an impulsive decision for me to buy the apartment here," said Mr. Xiong who already has two other apartments in the Tongzhou District of southeast suburb Beijing. Like most parents, he focuses on the school's faculty, teaching hardware and good overall education environment.

The man said he had already looked at about 200 apartments located in Haidian and Xicheng school districts before deciding on the one that seemed to best fit his family in every way.

The quality of the houses in the school district is not as high as expected, the Economic Observer noted, but parents still continue to buy as long as it is convenient for their children to go to a nearby good school. For students who have got their names registered in an appropriate school in the district, even basements have become a choice of many families because the price will tend to be lower.

Mr. Xiong revealed that he had met a person who spent 6.4 million yuan on a basement located in a school district in Deshengmen. "Even many children born after 2000 were willing to consider this," he said, adding that he himself really could not accept such a damp, gloomy living environment.

Reasons for house price rises in good school districts

The Economic Observer said it had discovered through multiple channels that there were two main reasons for the continuously soaring house prices in Beijing's good school districts.

First, to popularize high-quality school resources as much as possible, Beijing's Dongcheng and Chaoyang districts have recently abolished the former "excellent students' recommendation system." Instead, they have adopted a computer-controlled allocation system that randomly allocates students to the nearest schools to their homes.

The approach, expected to be promoted in the whole city in the future, has contributed to the hot market of good school districts to some extent.

According to the Beijing Municipal Education Commission, since 2010, the number of school-aged children has increased by 20,000 year on year, an average annual growth of 20 percent. This trend has further exacerbated people's worries about school district resources.

Second, houses in good school districts offer relative stability and resistance to price drops, so are considered an important channel for the middle class to deal with currency devaluation, and the preservation and appreciation of asset prices, despite the emergence of a housing bubble.

Chu Zhaohui, a researcher from the National Institute of Education Sciences, said the hot house market of school districts has been triggered by many reasons, including business speculation, young parents' immature education philosophy, and unbalanced educational resources.

Chu said that, with educational resources expected to become increasingly balanced in the future the phenomenon is "only a flash in the pan." According to some educational statistics, a person's success is 62 percent determined by congenital factors and only 30 percent by acquired factors.

On Feb. 22, the Ministry of Education issued a notice on its website, stipulating that, starting in 2017, for compulsory education, all students in 19 major cities including Beijing should be enrolled in schools near to their homes, particularly in the areas with the prominent problem of "school district house purchase."

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