Mortgage slaves

PUBLISHED : Wednesday, 03 May, 2006, 12:00am
UPDATED : Wednesday, 03 May, 2006, 12:00am

The latest catchphrase on the mainland is 'housing serf' - referring to people who must spend at least half their income on their mortgages. The boom in property markets over the past three years has rapidly increased their ranks.

Shenzhen computer engineer Chen Sibin, for one, considered himself a housing serf. He earned about 7,000 yuan a month, well above the average Shenzhen salary. Mr Chen enjoyed a carefree life until he bought a flat in the Futian district two years ago.

'My parents were coming from Anhui to Shenzhen, so I decided to buy a flat,' he said. 'I used up all my savings for the down payment and borrowed about 700,000 yuan from the bank.' He now pays 4,000 yuan a month on his mortgage, cutting down on many personal expenses to make ends meet.

In a recent official survey in Shenzhen, 32 per cent of the 15,000 respondents said they spent more than half their salaries on mortgages. Mainland media have compared them - tongues in cheek - to serfs in ancient times, who toiled day and night in the fields only to see rich landlords take their harvests.

Spending half your income on housing may sound perfectly normal to Hongkongers, but it's novel and unsettling for many mainlanders. Only 20 years ago, most still lived in government-allocated public units, and few thought about owning their flats. But China's rapid economic liberalisation and privatisation mean that most people now have to scrimp and save for a place to live.

Property prices in most major cities have skyrocketed over the past decade. In Shenzhen, housing prices are increasing about 25 per cent a year on average - despite repeated government measures to cool the market. While salaries have also increased, the gap between the two is widening with each passing month.

The rush of hot money from overseas into the mainland also adds fuel to the flames. Many Hong Kong investors - believing that the yuan will rise in value against the Hong Kong dollar - have parked their money in the Shenzhen property market, looking for a double gain. About 10 per cent of the luxury properties in downtown Shenzhen are owned by Hongkongers.

The rising price of property has turned into a social issue, antagonising the haves from the have-nots and further polarising society. Discontent with the housing situation, and resentment against developers, is on the rise. Shenzhen mayor Xu Zhongheng this year pledged to curb soaring prices. But many insiders in the business believe any official action will be mild - since the boom is doing so much to top up the government's own coffers.