As I am becoming ever more embedded in local life here, in part from having lived here for nearly 5 years, in part from having gotten engaged to a great local girl, and now, and certainly somewhat more worryingly, by dipping a proverbial toe in the local housing market, I thought I would note a few of the matters-of-facts that seem to be involved in this close-your-eyes and hope for the best apartment buying process. We’ll kick off with a few of the hopes. There must be a hope that the building you are buying gets built, a hope that once it is built it doesn’t just fall down again, a hope that you will actually end up with the deeds to the flat you paid for so one day you will actually be able to sell it, and a hope that this potentially bubble-bursting market doesn’t lead to an all engulfing civic anarchy.
These are just a few of the concerns that have passed across my recent conscious and sub-conscious states of mind, whether in the early hours of morning or during the darker hours of night. So, it is with trepidatious steps that I continue on along this path today by holding meetings with a few honest, straightforward, salt of the earth, “no worries mate” housing agents.
There is a requirement here for the property developers to get 5 validating certificates before they can legally build and sell a property, the last two specifically giving them permission to actually construct and sell the apartments. However, although a seeming madness to even consider buying a home, with a reasonable deposit being paid in the region of at least 30%, without these certificates, it is not unusual and in fact seemingly quite common for people to take a gamble and pay a low price, per square meter, when the company doesn’t have any certificates at all, or, may be less of a gamble, only a few. But, then the price isn’t even that cheap.
You would though think that when the missing two certificates are the ones that give the developers permission to build and sell the property it would still be quite a risk, but seemingly not. The property we have most recently been looking at has almost completely sold out, around 400 flats, the building process has begun and the prices have risen about 2000元 (yuán) a square meter over the last year, around £200 and $315, but they are still yet to gain the certificates that give them permission to sell and build. Let me just emphasize this for my own sense of sanity. They still do not have the legal permission to sell or build this apartment block, but they have sold nearly all the flats and they are building it.
And I wonder why I wasn’t looking forward to this process.
It was also noteworthy that the first time we went to chat with one of these housing agents the first question he asked was whether we wanted to buy a flat to live in. I am certainly aware enough of modern Chinese life and society to know full well the goings on in this market, with investment being a primary motive behind house buying, but it did still hit home (no pun intended) when asked that question: “Of course we are going to bloody live in it”, I thought, “It’s a flat, it is a place to live, what else are we going to do with it?”
I do also still find it somewhat disconcerting to be told that this or that apartment block has sold out, and did so some time ago, but when you pass by at night there are actually very few lights on. Which is not, I don’t think, due to a sudden interest in environmentally conscious energy saving measures. Although of course, I could be wrong. Now, even if I know something of these present economic circumstances, it is probably quite obvious that I am no economist or financier or even someone with anything more than a superficial knowledge of the house buying process. I have not owned my own home before, and of course, if this process is anything to go by, I may still never get there.
However, if the subprime mortgages tragedy of recent American and world history was in the end explained away as being based on simple greed, lax legislation and oversight. Then I think I am not too far off the mark in saying that this society, here at present, has its own number vying for the tag of the most self-interested and greedy members of the human population. With developers raising prices just because they can and people with means, or I suppose who may be haven’t, buying more and more properties and driving up prices, just because they can.
It doesn’t bode well, and even if it doesn’t all go pear shaped, it does as far as I am concerned, and even though I can of course understand it, leave a bitter taste in the mouth. And that is all noted without even dwelling on the astronomically high house prices that do now exist here vis-à-vis an average monthly salary. An average price here per square meter at present is around 7000元 (yuán) ($1050/£670), the average wage here in Xi’an is probably about 1000-1500元 per month ($152/£95-$228/£143). Although the real average is probably even lower than that. I have also outlined parts of this house buying process without even focusing on the guānxì (关系) ridden relationships that must go on behind various locations’ doors to allow some of those bank loans to be made, and those certificates to be handed out.
But, this is where I must depart from this little discussion, as I begin to get out of my depth within the murky world of Chinese political and administrative governance, probably in more ways than one. And just conclude by saying that this is one crazy, elitist market that may well result in losses for some, still huge profits for others and a majority whistling into the wind of wishful thinking and a different kind of hope; flat ownership but a distant dream. Though, some might say: “Lucky them.”
* There is a note here, over at A Modern Lei Fang, with more specific information about buying a flat in Beijing/China.
* And for anyone interested in checking out the local Xi’an market here are 3 Chinese language sites that list the majority of Xi’an’s properties, new and second hand: 1. Xian.Soufun.Com 2. Xa.Focus.Cn 3. Xa.58.Com
A page of the more Xi'an Centred Notes
What Is It About Xi’an That Makes It Xi’an And Makes It The Place People Like To Live?
西安
Ricardo,
I love the sarcastic tone in the article! I just wanto to say, once again, that whilst I can’t really agree with your decision to buy property in a country where 1. owners are only the owners for 70 years; 2. the state (or ‘collective’ I believe is the legal term) is the permanent owner of all land forever; 3. companies build and sell properties before they have the permission to do so; 4. property owners are often forcibly removed from their property if a new construction project has been agreed which requires the destruction of the owner’s house, however, I will certaintly keep everything crossed for you when you do buy something and wish you the very best of luck!
Elliott
On that positive note Master Elliot I think I’ll buy two. Though do keep those good luck wishes coming, they may well be needed.
Got to go worst case scenario and be comfortable with it, well, worst case scenario over and above putting down the deposit and the developers doing a runner with it, which the above exposition shows is a real risk without the appropriate certificates. Worst case scenario, excluding that scenario, is that we do at least have our own place for x number of years but then at some point we lose everything. Didn’t have much before, wouldn’t have much then. So be it.
It’s taken me a year or so to get my head in the right place to do this, it’s now there, but going in eyes open and prepared to lose everything. Though would be perfectly happy if a middling to best case scenario was to transpire. We’ll see.
Was going to say I look forward to more comments from your fine English self but not so sure!!!
Only joking, keep them coming.