Real estate rebounds as buyers return

Will the property market rebound with a vengeance in the wake of recent rise in prices?

Some market watchers believe as long as the government allows families to own only one or two houses, which has effectively kept investors out, genuine homebuyers will continue to stay on the sidelines while prices fall. They dismiss the chances of further price increases and blame developers and speculators for hyping up the market sentiment.

But it's also possible that the market is slipping into another round of overheating, as lower interest rates and excess liquidity unleash buyers' pent-up demand for nicer and better-located homes.

At least this is what I've felt over the past several weeks when I put my home on the eastern edge of Beijing city for sale.

My wife and I planned a long time ago to move into a neighborhood with better schools when our son reached kindergarten age. But we found it difficult to sell our duplex house, until early July.

Suddenly, my cell phone started ringing day and night with calls from agents who seemed to have rebooted after a lifeless lull. On the morning of our first open house, we received six families - a young couple, three middle-aged couples with children in tow and two families of three generations.

They were no nouveau riche type of buyers like the legendary coalmine bosses from Shanxi province, prone to placing a deposit - wads of renminbi notes stuffed in a rumpled plastic bag - on the spot. They were owners-occupiers who discussed with us if the grandparents should live upstairs, asked about the reputation of local schools and checked on mundane details about the house such as heating costs in winter.

Then came the bids, all beating our asking price.

Quite a few offered to pay up front, meaning they would have to bank the equivalent of more than half a million dollars in our account when the deed was transferred. Others were ready to pay higher prices, but only in installments over several months during which they could sell their current houses and arrange for loans in case of a shortfall.

Agents said such selling and buying of houses have been common among buyers and can involve quite a few parties if everybody needs to sell before buying to meet the government curbs on home ownership. They see boundless business potential from the up-graders: Many pensioners will move out of the city center to live in bigger houses with fresher air and more greenery, while young people who could only afford to buy their first home in outlying suburbs will try to move into central areas for better schools and hospitals when they have children.

While we weighed the offers, housing prices of our community continued to rise, reaching close to the levels of two years ago when the latest round of cooling measures were introduced. The older estates with more amenities, such as the Fangzhuang community in the southern part of the city, have reportedly seen prices rise at a faster pace, spurred by cheaper and more accessible mortgage loans after banks cut interest rates twice this year.

As would-be homeowners start to panic, assuming housing prices will shoot up again, the situation begs the question what the government's next move will be. Now that speculation has been effectively curbed and the market is awash with cash because of the economic stimulus measures, will bigger bazookas be rolled out to shoot down housing prices?

We decided to delay selling our home after we realized what sort of house we could buy in popular school districts with the proceeds now. We don't want to live in seller's remorse later.

The author is an editor-at-large of China Daily. E-mail: dr.baiping@gmail.com

(China Daily 08/11/2012 page6)