Housing prices in China
In China, buying an apartment has been very expensive for quite some time. The comments assuring that the property bubble is about to burst have been there for a long time too, I’ve been hearing/reading them for at least 10 years. However, the bubble is still alive and well, and getting bigger. 5 years ago I wrote a post on my Spanish blog in which I mentioned that the price per square meter for apartments in our district was 18,000 RMB, and I thought it was very expensive. Well, now I think it is very cheap because the current price is more than 60,000 RMB. That is around 7700 Euro or 8700 USD. Please consider that, according to this website, the average monthly salary in Suzhou is 4755 RMB. This other website says it is 5449 RMB. Besides, bear in mind that Chinese apartments are not exactly famous for their great quality and you don’t even fully own them (you only buy the right to own it for 70 years. Nobody knows what happens after those 70 years. The apartment will not exist anymore, most probably, due to its shoddy construction).
Even with that huge disparity between salaries and property prices, people keep buying apartments. There are several reasons for this. One is that owning an apartment is a prerequisite for most young men wanting to get married. Another is that owning an apartment gives your child the right to go to the school in that area (which means that apartments close to good schools are more expensive than the average). And the third reason I could think of is that Chinese people see an apartment as a safe investment. Spanish people also used to believe the same, until the property bubble burst in 2008 and suddenly homes were not worth shit.
And how do young people get their hands on enough money to pay the down payment for an apartment, you might be thinking? Well, their parents help them. Also, mortgage payments are reasonable because the Chinese social insurance covers part of it (up to 50%, I think).
In my street, which is about 500 meters long, there are like 15 real state agencies. Some of them, from competing companies, are next to each other. I wonder if the competing realtors become friends and go to have lunch together. They often take their board with ads and put it in the middle of the street, waiting for clients. I find this very strange. Is someone who was passing by suddenly going to decide to buy an apartment, like if it was a cup of coffee?
These are some of the ads I’ve seen: