AS restrictions on home purchases tighten in more central areas of Hangzhou, property speculators are pushing out into suburban areas where government roadblocks have yet to be erected.
In outlying counties like Tonglu, Lin’an, Jiande and Chun’an, the familiar scene plays out in front of new housing developments: loudspeakers, ear-splitting disco music, crowds of home seekers and swarms of over-eager salespeople with well-rehearsed spiels.
One example is the Joy Town development in the suburban Tonglu, about two hours’ drive from downtown Hangzhou. Large crowds started converging there on March 4, one day after the city announced tighter policies on home purchases.
The new rules, aimed at curbing property speculation, require that non-local residents buying a home in the city must have been paying into Hangzhou’s social insurance fund for a minimum of two consecutive years. Buying third homes is barred for both locals and nonresidents alike, and a 60 percent down payment is required on the purchases of second homes in most of the districts, which now include Yuhang, Xiaoshan, Fuyang and Dajiangdong.
The day before the new rules came into effect, the average number of homes sold in urban areas rose to 2,300 from about 1,000. The day after the policy implementation, the figure fell to 700.
According to a sales manager at Wanting Real Estate in Tonglu, which is handling the Joy Town development, most buyers come from Hangzhou, Ningbo and Shanghai. Home prices there average less than 6,000 yuan (US$869) per square meter, nearly a fifth of the cost in downtown areas of Hangzhou.
At the site, a Shanghai Daily journalist watched a woman who spent less than 15 minutes listening to the Joy Town sales pitch and perusing a model home before lining up at the cashier’s counter to sign up for a purchase.
The saleswoman informed the customer that there were only a few houses left. “Only 60 square meters or 105 square meters,” she said. “Which one do you prefer?”
“The 105 square meters,” the customer answered.
“Only second or 18th floors are left. Which one do you prefer?”
“Eighteenth,” the customer responded.
“Okay then, this is the price,” the saleswoman said as her fingers flew over the calculator pad. “Do you want to buy or not?”
“Ah, I need to call my husband first,” the customer said, hesitating.
“Look around you,” the saleswoman advised. “There are hundreds of people anxious to buy. Opportunity does not wait.”
“All right,” the woman said, as she stepped over to hand her bankcard to a cashier.
She then phoned her husband, assuring him that the home price was so low that it had nowhere to go but up in time.
Hustling is the name of the game in similar scenes played out at property developments ringing urban areas, like Junyue Mansion on the boundary between Hangzhou and Haining. Hundreds of potential buyers show up there every day.
A Shanghai Daily journalist pretended to be a potential buyer to get the flavor of the pitch from a Yingdu Real Estate salesman.
He told her, “It is a good investment, you know. The price will no doubt surge if this area becomes part of Hangzhou.”
A kilometer away, the Qian Tang Xin Yu development of the Xiangsheng Group was so overrun with potential buyers that a lottery was instituted on site to decide who would get first crack at the offerings.
Property speculation in Hangzhou has skyrocketed since the city hosted the G20 Summit last September, parading its attributes as a cosmopolitan city with a flourishing future. In the next five years, Hangzhou will hold the Asian Games, FINA World Championships and The National University Games.
Investors took the bait and began buying up property. At first, the city responded by restricting non-locals to purchasing only one property. But that didn’t put much of a dent in the buying frenzy as people flocked to jump on the bandwagon.
“Three of my friends have made lots of money by buying and then selling houses,” said a woman at Joy Town. “I want to try my luck, too.”
Interest in outlying property is fueled by expectations of annexations. When Fuyang turned from county status to a district of Hangzhou in 2015, the average home price leapt from about 6,000 yuan a square meter to more than 10,000 yuan.
Of course, real estate, like any asset bubble, can implode. Some analysts warn about risks in the suburban property boom.
“The price might increase, but the problem may be finding secondary buyers,” said Qian Minjie, who works at Living in Hangzhou, a leading real estate website in the city. “Urban residents are not willing to move out of town and the number of those migrating to suburban areas is not very big.”
He added, “Chinese investors like to invest in real estate because houses are tangible assets, but I always advise against putting all one’s eggs in one basket.”
Another property expert, who asked that his name not be used, said he receives more than 100 phone messages a day asking for advice on real estate investment. “People are scared of being left behind, but all this foam could quickly disappear,” he said.