Beijing has recently taken actions to curb skyrocketing home prices in some of the best school districts, as part of the efforts to stabilize the city’s housing market.
After a new round of lending curbs were introduced in Beijing and other major Chinese cities in mid-March to dampen the hot housing market, regulators in the capital city began to crack down on malpractices of housing agencies to fuel home prices in some school districts. Some realtors in the affected areas told Sino-US.com now the owners of these privileged properties are voluntarily lowering their skyrocketing home prices.
Zhang Yao (pseudonym) has been troubled by contract disputes over the past month, while now she could finally sit back with a sigh of relief. Just after China’s lunar New Year when the housing market was still calm, Zhang signed an agreement to buy a small apartment in one of the capital city’s best school districts. However, the market picked up after that with homes that could guarantee a high-quality school enrollment especially sought after. “The seller then decided to cash in on the hot market and find loopholes in our contract to make it void,” she complained.
The Beijing government requires public schools to enroll students who are residents of that district. Many middle-class families have squandered millions on expensive apartments in order to make sure their children gain access to high-quality education.
Over the past couple of years, housing prices in the good school districts have been shooting up. Even the prices of neighboring office buildings and surrounding houses were going up as well. Thus, it was worried the real estate bubble in school districts would spread to the whole Beijing market and then have a certain impact on the stability of China’s housing market.
“Houses are built to be inhabited, not for speculation,” Chinese President Xi Jinping is reported to have said at the Central Economic Work Conference at the end of last year. The Chinese government is believed to be able to fight with speculators and take measures to safely deflate the housing bubble.
The small apartment of merely 38 square meters for which Zhang has paid a large sum of down payment is in the Xicheng district, where many top schools are situated. Zhang decided to buy the home priced at 150,000 yuan per square meter for her now two-year-old daughter. “The apartment is too small to be livable for my family, but it could guarantee enrollment into a good primary school,” Zhang said, although she recognizes that under the new policies and rules, it may not be the case anymore when her daughter reaches school age.
In late February, the Beijing municipal education commission announced it was considering designating multiple schools for every residential district to curb speculative investment on school district properties. Although the message apparently failed to spread to all Beijing parents, real estate agencies still use the fame of school districts to attract buyers who are ready to pay incredibly high prices for properties with connection to good education.
In March, regulators with various departments including the Beijing Municipal Commission of Housing and Urban-Rural Development and National Development and Reform Commission joined hands to crack down on malpractices by realtors in school districts ‘boasting sky-high priced properties’.
The Sino-US.com reporter found out all the 10 outlets of main realtors including Lianjia, 5i5j, and Centaline Property in the neighborhood of the four communities including Fenghuiyuan, and Financial Street of Xicheng district had been shut down. It is reported that all the closed down realtors were dealing with highly priced school district properties and are suspected of price rigging and creating misleading expectations through rumor mongering. A real estate agent who didn’t want to be named told Sino-US.com the outlets are put under investigation by housing regulators to find out if they were speculating on the market.
“Now, we’re not allowed to even mention ‘school district properties’, the phrase have become a taboo,” he said, confirming the new restrictions are apparently effectively, and housing prices in the neighborhood of Financial Street, which is one of the best school districts in Beijing, have finally begun to go down.
Under the circumstances, the seller in Zhang Yao’s purchasing contract soon gave up his idea of terminating the signed transaction. “Now, I may be the loser considering school district properties are expected to lose value when they could not guarantee a good school anymore,” said Zhang. The small apartment she has bought is in a seemingly shabby block that was built in the 1970s. “Maybe 40 percent of the price is based on its educational value,” Zhang said, worrying she would not be able to sell the property out at the same high price in the future.