China’s High Property Prices Forced Divorced Couple To Live Together
Homes in China's big cities are pricey so most people could only afford to purchase one property in their lifetime. In fact, a divorced couple was left with no choice but to continue living together under one roof because each of them can't pay for or rent a nice home.
As reported on China Daily, former spouses, Mr. Yuan and his former wife, Ms. Lu (not their real names) live in Shanghai and they are in this exact complicated situation. The couple divorced in October 2018 but since they cannot split their apartment home in Changning district, they decided to just live together.
The couple's home is said to have a price tag of ¥8 million or $1.6 million in Singapore dollars. It will be difficult to divide their property and no one can move out either because they have no place to go.
"Neither of us can afford to buy the other's half and neither of us is willing to move out and rent a small, shabby or distant apartment, which would compromise the quality of life," Mr. Yuan said.
He added, "Today, house prices in districts within Shanghai's Middle Ring Road remain at the same high level as during the latter half of 2016. We are both working hard to save and hopefully pay half of the house price to the other someday."
At any rate, Forbes reported that the average prices of new homes in 70 cities in China increase at an annual rate of 10.4 percent in February which shows a .4 percent rise from January's rates. The business magazine noted that this was the 46th straight month that real property price had increased in China since May 2017.
While the rising property prices are beneficial for investors and builders, this is definitely bad news for people who want to buy a home. And unfortunately, the divorced couple mentioned is one of those who do not have the means to get a new property in China where they live.
According to Ted Bauman, Economist and Senior Research Analyst at Banyan Hill Publishing, there are some things that can squash the home prices and whole real estate sector and the best is probably ending the cheap credit.
"When you look at any large-scale investment phenomenon like the Chinese real estate bubble, one of the most useful questions to ask is 'how is it being paid for,'" Bauman said. "The answer is cheap credit that is available to chase the investment and drives up its price regardless of its intrinsic value."
The analyst stated that this means that real estate prices will continue to increase as long as credit is available for buyers.
Meanwhile, Beijing is encouraging its citizens from rural areas to move to the city. The government ordered small urban regions to discard rules on local hukou residency permits for property prices to go down. Bank financing was also made easier plus it lowered the mortgage rates.