In Between Tiers

Soaring house prices may have forced the Chinese government into imposing cooling measures on the nation’s property sector, but the chill has yet to take hold in some secondary destinations

- George Styllis

Julius Lee ponders just how much his house has appreciated in the 12 years since he bought it.

The 37-year-old electrical engineer bought his two-bedroom apartment in his home town of Dandong, bordering North Korea, for CNY320,000 (USD46,400). It is now worth about CNY600,000.

“The price has doubled so far,” said Julius.

But that is nothing compared to the sort of gains other homeowners have made since Dandong was swept up in China’s housing boom.

“My property would be considered growing slower than average [in Dandong]. For some other properties the price has increased a lot,” he said.

The unit price of his property is currently CNY5,000 per square meter. The others to which he is referring lie further west on the route to North Korea where properties fetch around CNY8,000 per square metres.

Dandong, a city less travelled among foreigners, has been boosted by a thaw in diplomatic relations between North Korea and the rest of the world, and follows tireless efforts by Beijing to rev up its economy with big real estate projects – with mixed results.

Although Dandong’s blossoming should be a vindication of Beijing’s advances to breathe life into stagnant cities, its booming housing market reflects the headache second-tier cities have posed amid efforts to cool the industry.

Since 2016, Beijing has made a concerted effort to rein in its real estate industry amid worryingly high property prices.

On average, house prices in China have been growing nearly twice as fast as national income over the past decade, buoyed by a rising population and economic growth.

In 2016, the government decided enough was enough. Average home prices in 100 major cities in China rose 16.6 per cent in September that year, compared with the year before.