Property prices in China's major cities saw an 11th consecutive monthly increase in April, but the growth rate slowed as the government's latest tightening policies gradually kicked in. Lai Xinlin / for China Daily

Property prices rise, despite new curbs on the housing market, report He Na and Peng Yining in Beijing.

In March, the government rolled out measures designed to cool China's red-hot property market by reining in speculative investment. One of the measures, a 20 percent tax on capital gains from property sales, triggered widespread panic among potential buyers and sellers.

Following a month of heated debate, speculation, anger, expectation and concern from potential homebuyers and sellers, many cities, including municipalities such as Beijing, Shanghai and Chongqing, have recently unveiled detailed plans to implement the guidelines in their own way. More governments are expected to follow suit.

Some of the measures, especially a ban on single adults purchasing second homes in Beijing, are considered the harshest imposed in recent years.

The average price of newly built apartments in 100 Chinese cities hit 10,098 yuan ($1,640) per square meter in April, rising 1 percent from the previous month. Prices have risen for 11 consecutive months since June, according to a report from the China Index Academy.

The policies have pushed many Chinese investors to buy homes overseas. In February, SouFun International, a real estate and home furnishing network platform, published a survey carried out among its members who want to buy houses abroad.

More than 60 percent of those surveyed set their budget for overseas homes at more than $500,000. The favored countries include the United States, Australia, Canada, New Zealand and Malaysia. The top three reasons for buying property overseas were immigration (44 percent), children's education (25 percent) and investment (23 percent).

To learn more about how Chinese are affected by real estate control policies, our reporters interviewed five residents in and around Beijing. Here are their stories.

On the border

By He Na

Zhang Xiaobai, 32, has always kept an eye on property prices, and her friends often joke that she behaves more like a real estate saleswoman than a PR consultant.

However, for many years she and her husband didn't own an apartment in the capital. They almost made it in March, but the plan became deadlocked over the implementation of China's new house price control polices.

"Can I call us victims of the new policies?" asked the native of Wuhan in Hubei province.

Because of their limited funds, the couple obtained a business mortgage in 2008 and paid 120,000 yuan ($19,000) for a small apartment in Yanjiao in Hebei province. Although it's outside the capital, the area neighbors the Beijing suburb of Tongzhou.

However, it never occurred to Zhang that her modest home could become an obstacle to buying a property in Beijing.

"We took a fancy to a 70-square-meter apartment that was still being built in the Tongzhou district in late March. Although it's quite a long way from my office, compared with our home in Yanjiao, it's much closer," said Zhang.

The couple's second home would cost around 1 million yuan if they obtained a low-interest mortgage through a housing fund.

"I've never dreamed of spending 1 million yuan, you know. It's much more than our savings, even after all these years. We were like beggars. We called almost every number in our address book to speak to friends and relatives. With their help, we raised the money and when the funds in our account finally came to 1 million, we both cried," she said.

"Both sets of parents live in the countryside and are in poor health. You have no idea how hard we worked to build up our savings and to win the trust of friends and relatives so they would lend us the extra money."

However, the procedure for gaining approval for a housing fund mortgage is more complicated and takes longer than that for a business loan.

"We were like cats on hot bricks while we were waiting, because we'd heard that stricter polices on loans were likely to be launched soon," Zhang recalled. "The wait was painful. Eventually, we got a call from the sales office, which completely snuffed out our hopes."

The government's new policy raised the down payment on the second property to 70 percent from 60 on April 8. "Even finding an extra 5,000 yuan would be an impossible task for us, let alone another 170,000 yuan. We explored every avenue, but we were unable to borrow more," she said.

In the end, Zhang and her husband had no option but to return the 400,000 yuan they had borrowed from friends.

"The new policies are aimed at cooling house prices, and helping ordinary people. We just want to end the daily commute between the two cities and would like a small apartment in the city in which we have worked and lived for many years. Is that too much of a luxury?" asked Zhang.

Divorce

By He Na

China's divorce rate has risen sharply in recent years, ringing alarm bells across a nation that attaches great importance to family harmony.

Data from the Ministry of Civil Affairs shows that 2.87 million couples divorced in 2011, a rise of 7.3 percent from 2010.

The new housing policies have sparked concerns, because many couples have tried to evade them by getting divorced but continuing to live together, and buying property as single people rather than as a couple.

Chu Zhiwei, 40, a landscape designer at a real estate company in Beijing, said she'd read reports about "fake divorces" many times. Usually, she would raise her an eyebrow and laugh at these "pragmatic" people, and she certainly didn't imagine that one day she would almost join the fake divorce army.

Chu and her husband own two apartments in the capital, one of them in the Guomao Central Business District, which is near her office.

However, for the sake of their son's education, they planned to buy another home in the Taiyanggong area, close to a middle school noted for its high enrollment rate to elite universities.

Zhang and husband Wang Gang have stable jobs and some savings, but they still can't afford to pay cash for the 70,000 yuan-per-square-meter apartment they plan to buy.

China's banks have already ceased to provide mortgage facilities for people looking to buy a third home, so Chu had no alternative but to work out the divorce plan. Her husband was against the idea initially, but faced with his wife's insistence, he consented to the plan.

The new house price control policies were implemented just as the couple discussed the content of their divorce agreement. The measures proved a killer blow.

"We chose to wait in the hope the new policies might cool the market and lead to lower prices. But who knew the authorities would introduce a new rule banning single adults with a permanent Beijing residence registration (known as hukou) from buying a second home?" said Chu.

"The two houses are registered to both of us. Now even if we divorce, we still won't qualify to buy. We should have done it earlier," she said, regretfully.

Chu was very sad, but Wang happily tore up the divorce papers. He admitted that suddenly he felt very relaxed.

"I think the middle school close to our home is good enough. It's really not necessary to buy an old house at a scary price just to get our son into a certain school. He didn't know about the divorce plan and we are going to keep it a secret from him," he said.

No qualifications

By Peng Yining

When he heard about the new regulations in early March, Qiu Hu, a 26-year-old salesman originally from Heilongjiang province, abandoned his dream of owning property in Beijing, the city he has worked in for five years.

"In my opinion, the new regulations are generally making it harder to buy property, because buyers will eventually pay most of the extra taxes," he said. "The measures might curb prices over the long term, but I can't wait because I got married this year."

According to Chinese tradition, the husband is responsible for providing a home for the family. A week before Beijing launched the new regulations at the end of March, Qiu bought a two-bedroom apartment in Yanjiao, Hebei province.

"It is right on the border of Beijing and Hebei," he said. "It is like the Beijing suburbs, only further out."

Although the area borders the capital, different polices are in place; unlike Beijing, purchasing a property doesn't require a local hukou. For most beipiao, or Beijing drifters - people such as Qiu, who work in the capital but don't have hukou or own property - have turned to "border" areas such as Yanjiao.

There are fewer restrictions in Yanjiao and property prices are lower, but the costs mount up in other ways. It takes 60 minutes for Qiu to drive to work, even in the best traffic conditions. "And also I feel lost," he said. "Once you cross the border, it's not Beijing anymore, and everything is different."

Qiu said the infrastructure and educational resources also lag behind those in the capital. "Even the heating is switched off a few days earlier than in Beijing," he said. Text messages sent by the local telecom carriers continually remind him he is not in the capital. "Every time I get home, a message pops up saying 'Welcome to Hebei!' Many young people dream of living in a big city and becoming successful, but this is the moment the dream gets busted."

He had planned to sell his apartment in Yanjiao a few years after purchase and use the proceeds to buy an apartment in the city, but as the new regulations have imposed stricter rules on the sale of second-hand houses, Qiu said his back-up plan doesn't seem practical anymore.

"I am going to wait," he said. "Maybe they will change the policy again. Who knows?"

The expat

By He Na

Some foreigners are instantly recognizable to Chinese people and Luc Bendza, 43, from Gabon is one of them. He often appears on Chinese television performing martial arts, and has played a number of roles in several popular movies and TV plays. Initially attracted by Chinese kung fu films, he moved to China in 1983.

In addition to his acting work, Bendza helps Chinese enterprises to invest in African countries.

In many people's eyes, he's a star and so they assume he owns a large house or a villa. However, Beijing's highly inflated house prices are as big headache for him as every one else.

"The longer I stay in China, the more I like the Chinese, I think. During the past two decades, I have waited for property prices to fall so I could afford to really settle down in Beijing. However, prices have risen ever higher following the introduction of each new control measure," said Bendza.

"My desire to have my own apartment has grown since my son was born last year. I feel obliged to give him a stable life and, to me, an apartment of our own is a guarantee of that stability," he said.

"I know the property policies well. My wife is Chinese and she and I discussed the subject a lot before the new control polices came into force on March 31."

The news that the policies were being introduced saw huge numbers of potential buyers taking the plunge to ensure they didn't get caught out by another rapid price increase.

"Our experience and instincts told us the new polices would be stricter than ever. If we didn't grasp the chance, we may have lost it forever. The price of new homes was sure to increase a lot because of these new policies and we simply would not be able to afford a home if we didn't act quickly."

Bendza and his wife had been saving for several years and with the help of a friend they quickly found and bought an apartment in the north of Beijing, close to the airport.

"The facts show that our decision was a wise one. The price of our new apartment rose hugely in the space of just 20 days," he said.

"I suggest that next time the government should undertake more research into the property market. Also, consult a greater number of people from all walks of life to work out really effective policies that will benefit the majority of people and not just a small number."

A new tactic

By Peng Yining

After months of searching and then decorating, Ding Hao, a 26-year-old dancer from Hubei province, finally moved into his new home in Beijing last month. Technically speaking, the 56-square-meter loft, which cost 10.5 million yuan, is not his home but his office, because he bought a commercial, not residential, property.

Chinese law forbids the use of commercial properties - purchase of which is not constrained by the need for a local hukou and is exempt from the new regulations - as homes. However, the new rules have been criticized for being too vague and not working as planned. As a result, this "gray area" is a source of hope for those who are not qualified to own property in the capital, but still dream of doing so. There are also added costs in terms of a property management fee and shorter duration of property rights - owners of residential properties are granted 70 years, but for commercial buildings, the duration is usually 50, or sometimes even 40 years.

"But nobody really uses these places as offices. All my neighbors are doing the same thing as me," said Ding. His community, between the East Fifth and Sixth Ring Roads, doesn't look like a business district; laundries and massage parlors have opened and the streets are full of people walking their dogs or pushing baby strollers.

"You would never know that I live in a commercial building, unless you saw my property certificate which says 'commercial' instead of 'residential'," said Ding.

However, his dream of owning an apartment and settling down in the city is strong enough for him to pay the higher costs for a commercial property.

"I have a stable job and it's time to settle down. The symbol of settling down is buying your own place."

He has spent 170,000 yuan on decorating "the office", transforming it into a cozy apartment with wooden floors and crimped curtains.

"I know it's not a perfect long-term plan," he admitted. "I am thinking buying a real residence, but the new regulations just seem to make it even harder to do that."

Jiang Xueqing contributed to this story.

Contact the writers at hena@chinadaily.com.cn and pengyining@chinadaily.com.cn

(China Daily 05/03/2013 page6)