Aug. 16 (Bloomberg) -- Tank Zhao is being forced to ditch tradition by taking a bride before buying a home as Shanghai bans unmarried non-locals like him from purchasing property.
The 28-year-old software engineer from Fujian province had been looking for an apartment ahead of plans to marry his girlfriend next year, in accordance with the Chinese proverb “Zhu Chao Yin Feng” -- build a nest before attracting the phoenix. He’ll now have to secure the phoenix before the nest.
“The policy is unreasonable; we aren’t speculators, we just need a place to live,” said Zhao. “Getting married first goes against our culture. I’ll have to explain to my girlfriend’s family that the Shanghai policy is what it is.”
Shanghai last year started limiting locals to owning two homes, while families among the city’s 9 million non-local residents were capped at one. Unmarried non-locals, who had been able to buy as long as they proved a year or more of tax payments, are now being frozen out altogether after the city toughened implementation of the curbs following Chinese Premier Wen Jiabao’s vow in July to “unswervingly” contain prices.
Chinese males are expected to own a home before they approach their would-be wife’s family for approval to wed. In rural parts of the country, parents extract most of the family’s wealth to build houses for their sons ahead of the marriage; in cities, securing an apartment is the equivalent.
New-home prices in China fell for nine straight months through May as government restrictions achieved the goal of cooling the market, according to SouFun Holdings Ltd., the country’s largest real estate website owner. In July, values bucked the trend, posting the biggest gain in more than a year, SouFun said Aug. 1.
“China’s property policies will definitely focus on those first-tier landmark cities,” said Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd. “If all the current curbs are not working, the government may have to be more hawkish in the second half. Their bottom line is to stop prices from rebounding.”
After stricter implementation of its curbs, Shanghai’s new home sales fell 16 percent in July from a month earlier to 7,025 units, according to data from Century 21 China Real Estate, the country’s second-biggest property brokerage. Sales had surged 24 percent to 8,365 units in June, the highest in 17 months.
“The policies did have some impact on the market,” said Huang Hetao, Shanghai-based researcher at Century 21.
China’s second-largest city by population, Shanghai had about 23 million residents at the end of 2010, about 9 million of whom were non-locals, according to the nation’s statistics bureau. An influx of construction, information technology, and other workers almost tripled the cost of homes in Shanghai in the past 10 years, according to government data.
Zhang Lei, a blogger from eastern Zhejiang province who has lived in Shanghai for eight years, has set up a “non-local singles anti-purchase restriction alliance” online. The 31-year-old, who says she doesn’t plan on ever getting married, was ready to pay a deposit for a 3 million yuan home ($471,000) in northern Shanghai in June, she said. Then the government crackdown nixed her plan.
“This is very, very irritating; it’s discrimination,” said Zhang, who boasts more than 110,000 fans at Sina Weibo, China’s Twitter-like microblog portal. “I’ve been making money and waiting for the time that I can finally buy a home. Then all of a sudden the government told us that we couldn’t buy.”
Non-Chinese people are allowed to buy one home in Shanghai as long as they show proof that they don’t own other properties in the country and have been employed for a year. Overseas companies are allowed to buy offices in the city if they are registered, according to the housing ministry and currency regulator.
“We pay our tax here and make contributions to the city’s development, the same as locals and foreigners,” Zhang said. “Why is it just us that can’t buy?”
Shanghai, with its own dialect, has some of China’s strictest population controls. To be defined a “local,” one must be born in the city to Shanghainese parents, be a skilled professional with residence of at least seven years and tax receipts to prove it, or marry a Shanghai local and remain married for 10 years.
The residency policies fuel chauvinism by Shanghainese against newcomers and reinforce divisions between the two groups, said Wang Xiaoyu, an associate professor and social critic at Shanghai’s Tongji University.
“Had the policies been based on tax payments, it would be closer to concepts of citizens’ rights,” he said. “Instead, we have the idea that locals come first, so people from different places fight with each other over the Internet.”
Previously, unmarried non-local residents were qualified to buy a home as long as they worked and paid tax in the city for a year, according to Lu Qilin, senior research manager at Deo Volente Realty, Shanghai’s third-biggest property brokerage. That changed after Wen ordered the crackdown.
Buyers could try forged marriage licenses, and the city government is unlikely to check as long as they aren’t from Shanghai, said Lu. Such licenses cost about 100 yuan, he said.
“Compared with what they pay for a property, this is small money,” Lu said.
As prices rose last year, some couples faked divorce to skirt the two-property limit.
In China, couples are typically wed in a formal process that can be done at short notice, much like renewing a driver’s license. The marriage is then celebrated at a banquet with family and friends that marks society’s recognition of the union, often months after the official event.
The average age at which Shanghai residents get married has climbed along with housing costs. Shanghai men averaged 32.45 years and females 29.89 years when they wed, according to the city’s statistics bureau. That’s up from 28.64 years for males and 26.43 years for females in 2007.
Shanghai’s home-price surge fueled concern a bubble was arising and housing was becoming unaffordable. A standard two-bedroom apartment about 10 kilometers (6.2 miles) from Shanghai’s center costs about 3 million yuan, versus an average annual wage of 52,655 yuan.
China responded in April 2010 with policies to deter speculators and curb price growth. It raised down-payment and mortgage requirements, imposed property taxes for the first time in Shanghai and Chongqing, increased building of low-cost social housing, and implemented purchase restrictions in about 40 cities.
As nationwide prices eased in the nine months to May, the government tolerated minor easing of curbs in some cities to ensure economic growth didn’t slow too quickly. China’s economy expanded 7.6 percent in the second quarter from a year ago, the slowest pace in three years.
China’s central bank cut interest rates in June for the first time in three years, and lowered them again in July. Home sales jumped 41 percent in June, according to government data.
The speed of the rebound prompted action. The central government ordered local counterparts that had relaxed housing policies to “strictly implement” them to prevent prices from taking off again, the land and housing ministries said in a jointly issued “urgent notice” on July 20. Real estate curbs are still at a “critical stage,” the government said.
China sent eight teams to 16 provinces in late July to check on the implementation of its property curbs, according to a statement on the central government website on July 25. New property curbs may result as the inspection teams return to Beijing, the official China Securities Journal reported Aug. 9.
“Real demand is very hard to restrain; you can try administrative measures, but demand from people is there,” said Albert Lau, Shanghai-based China head and managing director at London property broker Savills Plc. “Pent-up demand will be released as soon as they see any positive signals, because people need to live under a roof and get married.”
Premier Wen said easing inflation allows more room to adjust monetary policy and positive signs are emerging in the economy, the official Xinhua News Agency reported yesterday, citing Wen’s comments during a two-day inspection tour to the eastern province of Zhejiang.
The comments may bolster speculation China will cut banks’ reserve requirements or benchmark interest rates again after inflation slowed to a 30-month low in July, export growth collapsed and new yuan loans trailed estimates. A gauge tracking property shares on the Shanghai Composite Index rose 0.1 percent at the local close and is up 11 percent this year.
Zhao, the information-technology engineer who’s been dating his girlfriend for three years, said he had been facing pressure from her family to buy a home. He’s looking for an apartment, priced around 1.5 million yuan, in eastern Shanghai near his employer.
“I’ll now really have to calculate the timing: get a marriage license right away when I see the right property,” he said. “But that’s hard, isn’t it?”
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