For NPR News, this is All Things Considered. I'm Michele Norris, and I'm Robert Siegel.
If you think the real estate market in this country is out of control. Here's some advice: Don't move to China. Prices there are rising so fast, the government is taking action, raising interest rates on home loans to cool things off. NPR's Rob Gifford reports from Shanghai.
Liu Xun Shan is a happy man, the general manager of a new luxury housing development in the west of Shanghai, is so busy welcoming potential buyers to his showroom that he hardly has time for other visitors. The large western style houses are selling like hot cakes.
The whole property market in Shanghai is very hot, he says, but especially high-end gated communities like this one. Prices here have tripled in two years and it will double again at least within the next two years. It is not just the Chinese who are buying. Restrictions on foreigners buying real estate in Shanghai have been lifted and many investors from Taiwan, Hong Kong and around the region have piled into the market with its combination of shining new apartments and houses and beautiful old colonial mansions in the city's former French Concession District. And it’s not just people on the top end who are buying.
Sitting in a smoky restaurant just around the corner from the luxury compound, factory manager Yu Jiang discusses the tiny apartment he bought with his wife for less than 30,000 dollars. Yu came to Shanghai as a migrant worker ten years ago and worked his way up.
We wanted to buy an apartment to get a Shanghai resident's permit for our child, he says, then he can study here in Shanghai more easily, and the apartment gives us and him a base for the future.
Whether it's buy to live in or buy to rent, property consultant Sam Chris Bin who's lived here since 1994 says never mind the boom in US or UK markets, the Shanghai property market is developing even faster than the post-war property boom in the west.
We're in the most amazing real estate boom the world's ever seen. In global terms what we've seen in Shanghai is equivalent to the 50 years it took for the United Kingdom to achieve, it took 25 years for the United States to achieve, 10 years for Japan to achieve, is being compressed into 5 years in Shanghai. And we're just at the start.
Chris Bin says he's now receiving inquiries from investors in New York and Los Angeles. The market is so hot that the government is trying to cool it off, afraid that the bubble could burst. The Shanghai Government knows all about bubbles because one of the reasons the property market is so hot is that the stock market where everyone used to put their money in the 1990s has all but collapsed. At one of Shanghai's small stock trading floors where ordinary investors gather to buy and sell, there's a lot of anger about that.
I invested all my family's savings in the stock market, says this man,who doesn't want to give his name. Tens of thousands of dollars he laments, it's all disappeared, and there is no hope of the stock market rising again, he says. He may be right. The 90's stock market was based on the government over-selling shares in generally badly-run state firms, believing that investors with few alternatives would buy them. They did, but the market was hopelessly over-valued. And for 4 years now, stocks have been in free fall.
48-year-old Wu Hongda is sitting in the taxi he drives listening to a program that goes out daily on local radio discussing what to do about the local stock market. Everyone is wondering about it, says Wu.
I want to buy an apartment, he says, but I can't afford it. Everyone is speculating on real estate so the prices are just going up and up. If they revive the stock market people will put their money there, he says, and housing prices will fall. That may be wishful thinking, but the government knows it has to do something to cool the property market. There were already many angry losers from the stock market collapse, and the Communist Party whose legitimacy is now [Ignor...] can’t afford any more angry middle class people from the bursting of a property bubble.
Rob Gifford, NPR news, Shanghai.
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