Yang Ping, a 30-year-old business reporter, hasn't slept well
since September 27, when the central bank raised the down payment
for mortgages to 40 percent for second apartments.
It also lifted the interest rate on mortgages for
second-apartment buyers to 1.1 times the benchmark one-year lending
rate.
"I will go bankrupt," said Yang.
"I need at least another 180,500 yuan for the bigger down
payment," she said. "And my mortgage payment is an extra 780 yuan a
month."
Before the new policy was announced, it was a different story.
Yang's new apartment jumped in value from 11,000 yuan per sq m in
mid-June to over 15,000 yuan per sq m now.
A reporter mainly covering the property sector, Yang believes
Beijing's real estate market still has large growth potential
compared with international cities like Hong Kong.
When New Jiangnan Construction, a block close to the capital's
CBD, went on sale, Yang decided to snap up an apartment, even
though she had only 180,000 yuan to spare - barely enough for the
20 percent deposit.
"I was lucky to even get the apartment," said Yang, adding that
she was vying with over 6,000 people for the 350 units on offer. "I
didn't even have time to discuss it with my husband because he was
on a business trip."
Yang said she bought the property partly for investment purposes
and also for her own needs. She previously bought a 110-sq-m
apartment outside the Fifth North Ring Road.
"It usually takes me three hours in traffic (to get to work), so
I wanted to buy another place in the CBD," she said.
Despite the financial pressure, Yang is loathe to selling her
new apartment. "I believe Beijing's property prices will go up
further."
Zhu Qian, a 39-year-old executive, is in a similar situation.
But as head of the HR department of a listed company, she is less
likely to feel the pinch.
"If the down payment is really raised to 40 or 50 percent, I
will pull some money from the capital market," Zhu told China
Daily.
Although costs are rising, Zhu said she would still prefer to
invest in real estate rather than shares.
"The risks of property investment are still lower than capital
market risks," she said, adding that she may buy a third apartment
if the opportunity presents itself.
At the 17th National Congress of the Communist Party of China
(CPC), Guo Shuqing, president of China Construction Bank (CCB),
told reporters that second-apartment status will be based on family
rather than individual ownership.
However, Zhu Qian said staff at a CCB branch told her by
telephone on Friday that her mortgage will still be treated as a
first apartment since it will be the first in her name - even
though her husband already owns two apartments.
"If the banks, especially branches and sub-branches, still want
to provide individual mortgages, the new policy will be difficult
to implement," said Wang Yongxin, associate director of the
investment department of DTZ, an international real estate services
firm.
But some banks have taken a cautious approach to home loans
since the US subprime crisis hit.
"Mortgage down payments currently range from 20 to 30 percent
for the first apartment. But in real terms they are 10 percent or
even zero given the inflated prices," said Li Ling, general manager
of the examination and approval department at the Shenzhen
Development Bank (Beijing branch).
Total non-performing mortgages at the three major commercial
banks - CCB, the Industrial and Commercial Bank of China and Bank
of China - rose to 19.2 billion yuan at the end of 2006 from 18.4
billion yuan in 2005, according to a CCB report.
"Increasing down payments is a must," Li said.
(Xinhua News Agency October 18, 2007)
