China's home prices stagnate, purchases fall in 2014
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E-mail CNTV, April 2, 2014
For years now, property prices in China have been sky-rocketing. Average prices have gone up 10 times from a decade ago. Some people have made their fortunes on the back of rising real-estate, but that's left many others having to shell out their life savings -- and more -- to get on the housing ladder. Now, it looks like the long-talked about housing slowdown may be starting, good news for buyers, but a potential economic disaster, according to experts, IF the slowdown isn't managed well.
If you think China's economic growth has been strong, that's nothing compared to its housing market. Real estate has literally been roaring ahead in the last decade.
But behind the construction and equity boom, millions are now struggling to pay for a decent place to live.
25-year-old Li Yacheng is a graduate from a top university. She earns more than most Beijingers.... but she can only afford to rent a bed, and shares a room on the edge of the capital.
"This room is more spacious, more bright… So I'm more content than before."
We spoke to her a year and half ago, in her previous apartment. At that time, she'd just found somewhere to live after an exhausting search.
"Back then approaching graduation, I didn't expect I would share a room with one of my classmates. In some places, the landlord had divided the house into many small segments of rooms in order to make more profit. And even in those tiny sections, people were still sharing. I was thinking… "oh, life is like that is it?" … I didn't expect it to be that way." Li said.
Over the years, Li has moved from place to place, as landlords raise their rents.
"I remember like nine months ago, when I moved in here, I had to do all the packaging again, moving, getting a car… you feel, Oh, you have to move again. Oh, when can you stabilize?" Li said.
So renting a decent place to live is already very hard. But what about buying one? Now let me illustrate the real situation of China's housing market. This area, surrounded by the rope, is around one square meter. But right now, this one square meter in urban Beijing costs around 40,000 yuan. The average monthly salary in Beijing is under 5,000 yuan. That means that even if an average Beijinger worked for 6 months, without spending any money, they still wouldn't be able to buy a piece of property this big. So the pressure has been on the government to cool things down. But here's the dilemma - experts say that could have a big impact on the economy.
"A rapidly falling housing market is very detrimental to the overall economy. It's going to impact on everyday demand. People will feel their wealth is shrinking, so consumption will be reduced. It will reduce investment by developers. So if consumption and investment both decline, due to a falling housing market, it's going to hurt GDP growth and hurt employment." Professor Zhu Guozhong with Guanghua Management School, Peking University said.
A potential economic disaster, versus painstaking personal struggles, it's going to be a tough balancing act for government economists. China is the world's second largest economy. But Li says it cannot be a strong nation, if basic living needs remain a problem for so many citizens.
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