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Housing boom hits unlikely targets outside Beijing

Updated: 2011-10-02 13:28

(Xinhua)

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CHICHENG, Hebei - For a long time, the Chicheng county seat looked like many other small towns in China, with a low skyline and a few intersecting roads.

A few years ago, however, excavators and bulldozers moved into this town of some 50,000 people in the Yanshan Mountains about 280 km from Beijing. Cranes were erected among rows of rundown single-story houses. A construction boom was unloosed, followed a couple years later by the grand opening of several new real estate developments.

In less than a year, the average housing price almost doubled to more than 4,000 yuan (about $625) per square meter in Chicheng, a national-level poor county. This year, the county still has 35 villages where people earn less than 200 dollars a year.

"Housing prices have risen in a baffling way. How can we ordinary people afford it?" said a local resident surnamed Guo, who makes a little more than 1,000 yuan (about $156) a month.

"I often read in the papers that housing prices in Beijing are high. It never dawned on me the same thing would happen in our little town," said local resident Yue Lichao.

The Chinese government has reiterated it wants to rein in surging property prices. In recent months it has used various mechanisms to dampen housing purchases in cities where real estate prices were rising quickly. The central bank has also raised interest rates three times this year to increase borrowing costs.

The government's efforts have been successful. Property prices in Beijing have stabilized since last year, leaving investors little room for profit. As a result, counties outside Beijing have become a new target for investors.

In Dachang autonomous county, also in Hebei province, housing prices are now between 4,000 and 5,000 yuan per square meter, compared with 3,000 yuan a year ago. In Zhuozhou city, housing prices have risen 2,000 yuan per square meter in two years' time.

Housing prices in Chicheng began to surge a year ago when the Hebei provincial government announced a plan to boost development of counties neighboring Beijing.

"Housing prices rose virtually every month in 2010," said Ma Liping, a property salesman. "The price of a mu (about 666 square meters) of land is now as high as 400,000 yuan (about $62,500). Many farmers have made a fortune."

Surging housing prices have also affected marriage prospects in Chicheng County. A potential groom who can't afford an apartment in the county seat faces great pressure from the family of the bride-to-be.

"A 80-square-meter apartment costs more than 300,000 yuan (about $47,000). It's an astronomical figure for the villagers," said Ni Wenquan, the head of one village. "If the husband-to-be can't afford it, the marriage will be in danger."

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