Property prices in Beijing’s secondary market have come under scrutiny once again after a tiny apartment in a university district recently listed a sell price of 3.5 million yuan (HK$4.4 million) - close to the very high levels in Hong Kong.
The price of the 37-square-metre (400 sq ft), one-bedroom flat located in the city’s northwest Wudaokou neighbourhood, hit a record 100,000 yuan per square metre, Xinhua reported on Wednesday.
According to a separate Global Times report, the average price of property in the district is now 20 times higher than 10 years ago and three times higher than the municipality’s average income per capita, which the National Bureau of Statistics says is 32,900 yuan.
Apart from rising city-wide prices, increases in the neighbourhood have been fuelled by speculation and investors looking to cash in on the area, home to one of Beijing’s most prestigious primary schools. many parents label the neighbourhood as being at "the centre of the universe". Last October, a 38 sq m flat sold for a staggering 60,500 yuan per sq ft.
Wudaokou is also home to many top universities including Peking University, Tsinghua University and the University of Science and Technology Beijing. Most of the neighbourhood’s residents are international students.
The State Council, China’s cabinet, recently announced a steep 20 per cent capital gains tax on home sale profits in a bid to curb rising property prices - a problem which the party feels could threaten social stability.
The government has also raised loan rates and minimum down payments on second home purchases in cities such as Beijing and Shanghai, where prices are rising fast.
Average new home prices in China’s 70 major cities rose 2.1 per cent in February from a year earlier, according to figures from Reuters, marking the second straight month of year-on-year increase.