The Chinese housing market is feverish. Government statistics reveal that house prices have gone up 12 percent and are continuing to rise. A Dutch consultant who bought a house at the right moment is now sitting pretty. But a Chinese couple wanting to take their first steps onto the housing market are sentenced to live as ‘slaves’ to pay the mortgage.

Two cramped bedrooms with tiny windows on the east and a hallway: 150,000 euros. Liu Sining and his wife Gao Li can’t believe their eyes. “So much money for an apartment without a living room!”

Disappointed, the young couple, both administrative employees in their twenties, shuffle off to the bus stop. Liu phones the estate agent to find out whether he has anything better. “He’s not answering,” he says. “We’re not interesting clients.”

Panic buyers
In China’s housing market it’s the estate agent, not the client, who’s king. House prices in Beijing have doubled in a year, and they’re continuing to rise. But bubble or no bubble, say estate agents such as Homelink, buyers keep coming. Panic buyers are elbowing each other out of the way to get hold of an agent’s phone number. “They’re scared that if they wait too long,” says a representative for Homelink, one of the biggest Beijing agents for private homes, “all the apartments will be totally unaffordable.”

Analysts from the Chinese Academy of Social Sciences say the housing market has been overheating for years, but since autumn 2008, when the government introduced a stimulus fund, property developers have been given an open playing field.

And people who want a mortgage can – with the help of the same stimulus funds – easily get one. The result: a bubble, in which speculators are almost making the housing market boil over. Extra-high down payments and a ban on loans for third homes have not, so far, led to the intended drop in prices. The Chinese government is being cautious; above all it wants the property sector, which has become the country’s big moneymaker since the economic crisis struck, to make a soft landing and not collapse.

Two bathrooms
The 150,000 euros that the recently married Lius were asked to pay out for a gloomy and unpleasant 55 square metres would, seven years ago, have bought a spacious, sunny, two room apartment with a substantial living room and two bathrooms. When Marieke Reichwijn, a Dutch consultant in Beijing, saw that the apartment also had an open balcony behind the kitchen, she was sold. “Chinese banks had just begun providing mortgages to foreigners. I was really only looking for fun, to see how it all worked, when I stumbled on the ideal apartment.”

Despite the fact that she bought the apartment so she could live in ‘Good Luck Village Number 2’, and not as an investment, Ms Reichwijn says it’s “still nice” to know that her property has since tripled in value.

“The bubble exists because a huge number of young people are buying, even though they’re at an age when renting would suit their incomes better. If too many people jump into the market all at once, it will lead to overheating.”

Baby
Traditionally, the man first finds a new home; then the parents give their daughter away. In the countryside, that means building a farm. In the city, it used to be customary for a young couple to have their own room in the house belonging to the groom’s parents. Today, they’re demanding more: a private dwelling is a must, and preferably quite large so the parents can come to live with the young couple when a baby is born. “We were married in January,” says Gao Li, “but we’re still drifting from one rented room to the next. My mother calls me every day to ask if we’ve found our own little nest.”

Ten years ago, that was not an unrealistic idea. House prices in China were low, thanks to subsidies that enabled town dwellers to buy the rented property they were living in from the government. But today the price for one square metre in Beijing is fast approaching that of one in Tokyo, New York or London.

And that’s making people upset and angry because Chinese salaries are one tenth lower than incomes in the Western world. If they buy those pricey 55 square metres, Liu Sining and Gao Li’s mortgage will eat up 80 percent of their income for the next 20 years.