The cost of owning a home is becoming an increasingly heavy
burden on middle-income families, according to a report from the
Chinese Academy of Social Sciences.
And with the central bank's recent interest rate rise, the
situation is set to get worse, Wang Lina, a researcher with the
academy and author of the report, said.
Since 2004, housing payments have been consuming more and more
families' incomes, with most households now spending about half
their total income on loan repayments, Wang said.
"This is a worrying situation. If the interest rate increases
further, those who cannot afford to buy a house now will never be
able to buy one," she said.
Wang's conclusion was drawn after she and colleagues conducted a
two-month-long study in Shanghai, Beijing and Shenzhen, where house
prices have been soaring.
Statistics from the National Development and Reform Commission
showed that house prices in 70 major cities in the country rose by
5.3 percent last month.
Shenzhen and Beijing led the pack with nearly double-digit
increases.
Despite a series of measures being adopted to regulate and
stabilize the property market in recent years, prices have
continued to rise across the country, especially in the major
cities.
The report said that the steady increases were due to the
country's rapid economic development, which created a huge gap
between supply and demand.
In major cities like Beijing and Shanghai, which have huge
floating populations, the demand for property is even greater.
More than one-third of the houses in Beijing are owned by
non-Beijing residents, the report said, with the figure in Shanghai
at approximately a quarter.
The report also found that about 43 percent of Beijing's
high-end properties, with an average price of more than 10,000 yuan
($1,294) per square meter, were bought by non-Beijing
residents.
The increasing prices are leading to mounting pressure on the
so-called "housing slaves" who are forced to lead frugal lives in
an effort to make monthly loan payments.
Adding insult to injury, the recent interest rate rise, which
was intended to help rein in inflation and the excessive growth in
credit, has worst affected low-income families.
Since the rise, middle-income families have found themselves
spending an extra 4 percent of their monthly incomes on housing
repayments, while the figure for low-income families is 8
percent.
Middle-income families are defined as those earning a between
60,000 and 500,000 yuan ($7,765-64,716) a year, the academy
said.
(China Daily March 23, 2007)