One of the most popular television series in China in 2010 was called 'Woju' - roughly translated as snail home, alluding to the tremendous burden in China of realising the dream of home ownership. Peter Cai reports for Sydney Morning Herald.March 23, 2012 -- In the drama, the leading actress becomes a mistress to a powerful official so that her sister can afford a place of her own.
The series proved so popular the government had to ban it, often a reliable indicator of mass appeal. (That powerful official ends up dying in a car crash after being caught out for his mischief by an anti-corruption investigator.)
The series, though banned, circulated widely anyway, and sparked a nationwide debate on housing affordability issues that shows little sign of abating.
Many culprits have been blamed for the soaring house prices, including mother-in-laws, as it happens. The Chinese marriage market turns out to be highly competitive and favours young bachelors with houses.
Out of whack
According to a new report just released by the Development and Research Centre of the State Council, the official think of the Chinese cabinet, the cost of home ownership in China is much higher than international average as measured by house prices relative to income.
(Such deviations won't be unfamiliar to Australians. Our housing affordability is on the wrong end of most international surveys, such as The Economist magazine's regular one.)
The Chinese report reveals that an apartment in Beijing costs 21 times the average income of a household. The international average is about four to six times.
The chief economist of the National Bureau of Statistics of China described the housing affordability crisis as having reached a breaking point.
"House prices in Beijing are absolutely ridiculous. When a young couple purchases a house, parents and grandparents from both sides need to help out. The collective effort of four families is required to support a young family's decision to buy a house. Three generations of savings are thus exhausted in buying a single house."
Canny Chinese financiers are offering inter-generational mortgages to the home buyers. This development is a potentially frightening echo of a financial innovation during the heyday of the Japanese housing bubble, when three generations took out a collective mortgage to afford a home.
Researchers at the Chinese Academy of Social Sciences believe that the house-price trends will make home ownership an impossible dream for 60 per cent of China's urban residents. This outcome may rise to a remarkable 85 per cent once the migration of rural workers into the cities is factored in.
The Chinese government has been fighting the soaring house prices with all the policy weapons at its disposal: an ambitious program to build 36 million units of public housing; administrative curbs on property speculation; requirements for large down-payment when buying a house, and so on.
And there are signs that the property sector is cooling, much to the relief of "snail" families anxious to secure a home. But it's not so good news for Australian iron ore miners who are starting to see Chinese demand for their commodity flattening out.