Prospective buyers look at a model of a residential real estate project on Saturday at the Guangyang Economic Development Zone in Langfang, North China's Hebei Province. (Photo: Li Xuanmin/GT)
The real estate market is boiling over in parts of suburban Beijing, due in large part to a plan to relocate the municipality's government offices to a distant district. Since the plan was unveiled last year, property buyers have swarmed into certain areas in North China's Tianjin and Hebei Province that border Beijing. The results have been skyrocketing home prices and a growing imbalance between supply and demand. Although the local governments have stepped up efforts to rein in prices, some of the policies have failed, while others may have even exacerbated the problem.
It took scant minutes for the two shuttle buses to fill up.
As soon as the two 50-seat vehicles pulled up to the curb on Saturday morning in the CBD of Beijing, the gathered crowds surged for the open doors.
On one of the buses, Sun Zhi, who organized the free trip, welcomed the passengers as they set out for their destination: the Guangyang Economic Development Zone of Langfang, North China's Hebei Province, a 40 minute drive from downtown Beijing.
Then Sun broke some bad news. "We were supposed to visit four real estate projects today, but unfortunately we will only be able to see one, because the other three sold out this week," the real estate agent said.
Passengers grumbled. "I visited Langfang around the end of April, and there were still plenty of houses available at that time," said a potential buyer surnamed Li.
"Considering how fast they sell out, I should have bought a unit then," Li said.
Another passenger surnamed Huang mentioned how another housing project in Guangyang had received 1,500 advance orders for 200 available units. Suffice to say, those units were no longer available.
Over the last few months, there has been a mad dash to buy up homes on the outskirts of Beijing that are outside the city limits, such as Langfang. Even skyrocketing property prices have yet to dampen the enthusiasm of buyers.
The average housing price in Guangyang soared from around 8,000 yuan ($1,199) per square meter in April to more than 10,000 yuan per square meter in June, according to the real estate website soufang.com.
The average home price in Yanjiao, a town in Langfang that borders Beijing's Tongzhou district, doubled from the previous year to more than 20,000 yuan per square meter in June.
The town's priciest properties go for 30,000 yuan per square meter, rivaling home prices within the South Fifth Ring Road in Beijing.
Langfang's housing prices rose 3.66 percent from April to May, the fifth largest increase among all cities in China, according to data from the China Index Academy, a Beijing-based property research institution.
The same thing is happening in other areas bordering Beijing, such as Wuqing district in North China's Tianjin, where property prices have almost doubled in 2015, a sharp contrast to the 15-25 percent increase in Beijing over the same period, noted Beijing-based property group Centaline.
Policy and prices
In 2012, Wang Yuchao, an office worker in Beijing, bought an apartment at Yanjiao for 6,000 yuan per square meter.
Wang told the Global Times on Sunday that she chose to live in Yanjiao because she could not afford the sky-high home prices in Beijing.
But now that door has closed for other young professionals looking for inexpensive housing. Wang's home has quadrupled in value since she bought it - an indirect result of Beijing's government policies.
After the circulated news in May 2015 of municipal government relocating many of its offices to Tongzhou, home prices took off in suburban Beijing, especially in the three counties in Langfang that share a border with Tongzhou - Yanjiao, Dachang and Xianghe, said Zhang Huaxue, deputy general manager of China Index Research Institute.
"Once the Beijing government moves to Lucheng town in Tongzhou, then Yanjiao will be like the Second and Third Rings of Beijing. Xianghe and Dachang will be like the Fourth Ring, and other areas near Beijing are like the Fifth Ring," said a real estate agent surnamed Deng.
In August 2015, the Tongzhou District Government instituted home purchasing restrictions that diverted the demand into Beijing's suburbs like Yanjiao, said Zhang Dawei, chief analyst at Centaline.
But those aren't the only factors driving up housing prices.
Driving across Guangyang, one can see green flags with slogans promoting the coordinated development plan for the Beijing-Tianjin-Hebei bloc proposed by the central government.
Under the plan, several transportation lines linking Beijing, Tianjin and Hebei have been proposed, including Pinggu Line and S6 suburban railway.
"The construction of the transportation system is expected to allow Beijing's surrounding areas to take advantage of their proximity to Beijing, while also improving their infrastructure," Sun said.
However, experts noted that in the wake of the Beijing government plan, investing has outweighed other purposes, based on speculation that homes prices will keep going up, thus increasing the possibility of a housing bubble.
"It's hard to say whether the coming population increase is in proportion with the construction of new houses," Zhang from Centaline said.
More controls, less effects
Facing an overheating market, the Hebei government has stepped up efforts to rein in the home prices.
In April, the Langfang government rolled out a set of restrictions, such as increasing the minimum down payment requirement to 30 percent and prohibiting buyers without local residency from purchasing more than one home in the city.
It also strengthened supervision over property developers, making certificates issued by local government a must for the selling of residential buildings.
Two months have passed since the restrictions took effect, but real estate agents said they have failed to cool down the market.
In areas such as Guangyang, the government's orders have not been carried out effectively, as developers still sell properties without the proper certificates.
However, in Yanjiao, new homes have hit the market at a slower pace because of tightened sales requirements, and no new projects will go on sale for several months.
When asked, Deng suggested that clients can still purchase a home in Yanjiao if they are willing to add 2,000 yuan per square meter to the current pre-sale price and negotiate with the current bidder.
This poses a potential problem, as the imbalance between the supply and demand might push home prices higher.
"This is one of the projects that sold out this week. The homes won't be ready to be handed over to buyers until 2020," Sun, the bus trip organizer, said as the shuttle bus passed through a patch of green fields.
Yet the construction process has not gone beyond a hole in the ground, and it's hard to envision what the area will look like five years later.
