Location! Location! Education!(2)

A board outside a real estate agency offers xuequfang apartments between 48,000 yuan and 70,000 yuan per square meter. Photo: Ni Dandan/GT

Triple the price

It cost Zhuo a bit over 300,000 yuan for the 30-square-meter apartment, which she sold last year for 1.2 million yuan. The woman still keeps the 70-square-meter unite which has seen its market price more than triple. She is renting out that apartment for 3,500 yuan a month.

In August last year, a survey by the Youth Daily and an online real estate information provider in Shanghai showed that 80 percent of the people surveyed believed xuequfang prices in Shanghai had been manipulated by the market and were way too high. But nearly half of them said they would purchase a xuequfang though 60 percent said they wouldn't live in these apartments.

A quiet period

With the new tight house purchasing rules, however, the market seems to be experiencing a quiet period at present. Wang Quan, a consultant with a real estate agency on Changping Road, Jing'an district, said his agency had not completed any transactions in the past three months. The agency Wang works for specializes in properties for the neighborhood complex on Haifang Road that is linked to the Jing'an Education College Affiliated School, a city-level school that has both primary and junior high schools. It has long been an extremely popular goal for the city's parents.

The complex was built in 1997 and its reputation spread in the past few years as its prices rose to some 100,000 yuan per square meter. At present, Wang said there were only four small apartments ranging from 30 to 35 square meters advertised for sale. The average price was 86,000 yuan per square meter.

"Some property owners withdrew their advertisements after learning about the policy changes. Some are afraid that schools in the district might check to see if their students' hukou are registered locally," Wang said.

While this complex on Haifang Road has seen its property prices soaring, the Jing'an Education College Affiliated School has been struggling to cope with a dramatic increase in the number of students. The Wenhui Daily reported recently that 10 years ago the school was enrolling only 20 students annually from its catchment area but in recent years about 150 have been enrolling.

The gloomy outlook for xuequfang is not unique to Jing'an, where the authorities have introduced stringent regulations. An experienced real estate agent who specializes in xuequfang in Xuhui district, Wu Yuehong, said the volume of sales for 2014 will probably be only half last year's total.

"The sky-high prices are only the surface of the story. The real situation is quite appalling. Would-be buyers now cannot afford the expensive apartments that are within the enrollment areas for the schools they hope for. But they think the cheaper apartments are a risky investment as these properties will not guarantee that their children will get into their ideal schools given the annual redrawing of boundaries for school enrollment areas."

Added to this are the new government restrictions on homeownership so parents are growing even more cautious when it comes to the purchase of xuequfang. A survey by Century 21 China Real Estate in Shanghai showed that the average xuequfang price dropped by between 2 and 5 percent in the first half of July compared with last month in parts in Minhang, Jiading, Zhabei and Changning districts. Some blocks have even price plunges of more than 10 percent.

"The most important undefined element is the redrawing of the boundaries. Purchasing a second apartment in Shanghai is a brave act nowadays given the limited access to loans," said Tan Linlin, who has been looking at apartments around the Shanghai Mingzhu Primary School's three campuses in Pudong.

Tan, the mother of a 2-year-old boy, said it would be better if the authorities could plan and properly balance the allocation of educational resources - this would ultimately save the trouble of finding xuequfang.

A worldwide phenomenon

The xuequfang phenomenon doesn't just exist in Shanghai. In Beijing, things are even crazier. In Xicheng district in the capital, in the enrollment area for Beijing No.2 Experimental Primary School, which is at the top on the list of Beijing's key primary schools, apartment prices have peaked at more than 200,000 yuan per square meter since December last year.

In May this year, an apartment owner in the area was asking for a record 350,000 yuan per square meter. Just next to this are apartments that don't fall within the school's range and these are fetching only around 60,000 yuan per square meter.

It happens overseas. In the UK, some parents are just as passionate about their children's education as their Chinese counterparts. Sometimes as many as 11 children compete for one place in a reputable British school.

British schools also enroll children from their neighborhoods. In 2012, Nationwide, a major mortgage lender in the UK, compared the average exam scores at the country's primary schools and prices of houses in the surrounding areas. The survey found that for every 10 points a school scored in the Standard Attainment Tests, surrounding property prices went up by 3.3 percent.