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With apologies to Charles Dickens, it is both the best and the worst of times for young homebuyers struggling to make monthly mortgage payments.

 

It is the best of times because thousands of young professionals in big cities such as Beijing, Shanghai and Guangzhou feel more secure, having already bought or planning to buy a new home with a mortgage loan soon after graduating from college.

 

It is the worst of times because their mortgage payments often swallow up around half their monthly income, restricting other aspects of living.

 

What is more, some real estate experts say the young homebuyers' belief that they have to buy now because housing prices are only going to rise may be a fallacy.

 

A survey last year by the Beijing Construction Bureau showed that the 21-30 age bracket accounted for 38.8 percent of all homebuyers in the city, a higher percentage than any other group. Compare that with Western countries, where the highest percentage of homebuyers are older than 35.

 

On the upside, unlike their parents who lived in generally small and shabby housing units allotted by the government before the practice was abolished in 1997, younger generations have shown a strong commitment to buying their own home.

 

"Their homes are bigger and of better quality," said Nie Meisheng, chairwoman of the Real Estate Industry Chamber of Commerce. "They live lives that their parents dared not dream of before."

 

The downside is the heavy mortgage payments, which, in most cases, take half or more of their combined monthly income.

 

To make ends meet, young homebuyers are forced to lower their living standard by cutting off travel plans or postponing further education opportunities. And some do run into financial difficulty.

 

A Chinese term translated as "mortgage slave" has been adopted to describe those whose mortgage payment is more than half of their monthly salary. Most experts say the mortgage should be one-third of the household income.

 

"I am a man who can no longer live a happy life; I am a slave to the bank," Mao Shi said after he bought a new home last month in Beijing.

 

"The loan means tremendous and invisible pressure. What annoys me the most is that this pressure will be with me for the next 30 years."

 

Working as a deputy department manager at a State-owned enterprise, Mao paid 300,000 yuan (US$37,500) as the down payment for his 900,000 yuan (US$110,000) house, which is 103 square meters.

 

Mao earns 8,000 yuan (US$1,000) a month, and his wife has just found a job.

 

Both Mao, 31, and his wife, Yu Minghui, 27, wanted a second-hand house at first. However, second-hand apartments in Beijing were mostly built in the early 1980s and thus have structures that are less than satisfactory. Unable to find a good second-hand apartment, the couple settled for a new one that is a bit larger than they expected.

 

Mao and Yu will pay 3,500 yuan (US$438) every month.

 

"It is not what we planned, but we didn't have many choices," Mao said. "If we don't buy it now, the price will only go higher."

 

Mao blamed himself for not buying earlier. The price per square meter of his flat was 1,500 yuan (US$188) lower last year.

 

"I regret it to death. I wish I'd bought it earlier," Mao said. "I just didn't see through the market last year. But it is better now than later."

 

What worries him the most is that from now on they can't afford any illnesses or any urgent financial problems.

 

"Now I think of nothing but to earn more money to pay off the debt as early as we can," Mao said. "I don't care about going on business trips or having to work extra.

 

"We can't afford a car any more. We have to postpone the plan to have a child. We have to refinance everything."

 

Many young professionals say they can't afford changing jobs any more after they bought their houses.

 

"I am more aware of keeping my job to pay for the loan," said Liu Jun, 29, who earns a monthly salary of about 10,000 yuan (US$1,250) as an administrative manager at a foreign law firm after changing jobs several times.

 

At the end of 2004, Liu bought a 110-square-meter flat near the gate of Chaoyang Park in Beijing, a high-priced area.

 

The flat cost nearly 800,000 yuan (US$100,000) and the down payment, 20 percent of the total cost, was paid by her parents. She now pays 4,500 yuan (US$563) to the bank every month and will for the next 18 years.

 

She has had to adopt a more frugal life than before.

 

She used to go shopping at the shopping mall in the China World Trade Center, where the top world apparel brands are on display.

 

"I never used to blink when I bought a skirt for 2,000 yuan (US$250)," Liu recalled.

 

Now she visits department stores where clothes and shoes are much cheaper. "I've grown more sensitive to the discount tags now," she said.

 

Housing expenses are already claiming too much of the total incomes of young city-dwellers, squeezing out spending for education and other activities, said Bai Nansheng, a professor at Renmin University of China in Beijing.

 

Most parents of one child are willing to give up their life savings so that their only children can put a down payment on a decent home, she said.

 

It has advanced the timetable at which young professionals should be able to afford to buy by at least three to five years, she added.

 

The overheated prices have also sent an urgent message to young homebuyers, most of whom believe it is better to buy now for fear that prices will only rise.

 

Statistics from the website of the Beijing Construction Committee show that the average price of commercial housing in the city from January to July in 2005 had surpassed 7,000 yuan (US$863) per square meter, 22 percent higher than the previous corresponding period.

 

However, consumers' enthusiasm to buy homes now is questioned by real estate experts, who are discouraging young people's purchasing plans.

 

"Don't panic because of the increasing price; it is not rational to buy now," said Yi Xianrong, a top real estate researcher with the Chinese Academy of Social Sciences and a long-time critic of land developers.

 

"It will only make the price higher, and the industry will see a vicious cycle."

 

And there are alternatives. Real estate experts suggest young people buy a home in accordance with their income level, so that they will face less financial pressure.

 

People with medium incomes should search for cheaper homes, and low-income people should continue to rent, said Yin Lijuan, a marketing manager for the 5i5j Corporation, a leading Beijing real estate agency.

 

Renting is still the right choice for young people who face a more dynamic work situation and have unstable incomes. Their time for buying has to come later, Yin said.

 

Qin Chuan, 28, shares a two-room flat on the north Second Ring Road in Beijing. He and his flatmate pay 1,000 yuan (US$123) a month.

 

"I am not pressured by the rent," said Qin, whose monthly salary is about 6,000 yuan (US$750). "If I buy a home, I will definitely feel as if I'm carrying the weight of a mountain.

 

"Housing prices are ridiculously high. Buying a house now would be like giving money to the developers and working for the bank for the next two decades."

 

By contrast, renting allows for more freedom when considering a change of jobs. Qin, for example, quit a secure government job a year ago to work for an international non-governmental organization.

 

"I'd always wanted to try a new career," he said. "If I had had a house mortgage to pay at that time, I wouldn't have been able to realize my dream."

 

Living near where you work is the choice of many young white-collar workers. Most of the office buildings are downtown, where housing prices are often the highest but rent can be reasonable.

 

"Where you work should have a bearing on where you live," Qin said.

 

"A convenient distance from home to work improves work efficiency, and the money saved on commuting will allow me to eventually afford a car."

 

Policy fine-tuning

 

Last month, several policies were unveiled to encourage real estate developers to build more small-sized units to meet the surging market demand.

 

"The large and medium-sized flat has been overrunning the market," Nie said. "We need more smaller and medium-sized ones for the lower-income people."

 

New policies raise the down payment from 20 percent to 30 percent for houses bigger than 90 square meters.

 

For most young people in the cities, whether to rent or buy depends on what kind of life they want to live and whether they can afford it, said Yang Sheng, public relations official for the Modern Media Group.

 

"I'm not afraid of the pressure at all," said Yang, who bought a 100-square-meter home for 500,000 yuan (US$60,460) in 2001, one year after graduating from college. His parents paid the 150,000 yuan (US$18,138) down payment.

 

Now the flat prices have increased to 8,000 yuan (US$1,000) per square meter, from 5,000 yuan (US$604.60) when Yang bought it.

 

To reduce the financial burden of his 10-year mortgage, Yang worked hard and took a job with a salary that is almost triple what he earned at his starting job.

 

"Everyone is a slave for something in a certain way," Yang said. "Housing is only a part of pressure in life. Just be smart and ride the wave."

 

(China Daily June 14, 2006)