Accountant Jiao Yurong carefully organized her family’s finances to put her son through university in the US. Now that he has the coveted degree, she has been saving to buy him an apartment, but soaring property prices in China — and a series of moves by the government to rein them in — are throwing a spanner in the 50-year-old mother’s plans, and she said she did not know how to proceed.
“Just when we had saved enough for a down payment, prices surged,” said Jiao, a Beijing resident. “The policy is so unstable ... I’m so confused.”
Jiao is not alone. Prospective home buyers are reeling from a series of measures put in place by the Chinese government to curb rocketing prices amid persistent fears about a ballooning bubble in the real estate sector.
Authorities have tightened restrictions nationwide on advance sales of new property developments, introduced new curbs on loans for third home purchases and raised minimum down payments for second homes.
The Beijing city government has gone even further, limiting families to one new apartment purchase and barring people who have not paid taxes or made social security contributions in the city for one year from getting home loans.
“Sellers have started to lower the prices,” said Hu Jinghui, vice general manager of 5i5j, a real-estate agency chain that has around 600 outlets in eight cities across China. “But the buyers are still waiting.”
At the Beijing Real Estate Expo last month, the average price of a new apartment in the city was about 21,164 yuan (US$3,100) per square meter, double that of last year, state media said.
That means a 90m² apartment in Beijing would cost 1.9 million yuan, compared with the average per capita income of 26,738 yuan last year.
Since the capital put in place the austerity measures on April 30, prices have dropped an average 10 percent to 15 percent, with the number of home purchases slumping by 50 percent, Hu said.
Jack Guan, a securities firm executive from the coastal city of Qingdao, searched last year on the outskirts of Beijing for his first home, but said he could not make a deal as prices “went insane.”
“I am going to wait and see. I think this is an approach that many people have adopted as now there is a possibility for a price cut,” the 27-year-old said. “It will not cost me much if I wait for another two years.”
In 2008, China also introduced a range of policies to dampen the market frenzy, but a government stimulus package to prop up the economy during the financial crisis quickly negated any progress made.
The new measures so far seemed to have had a limited effect, as official data showed on Tuesday last week that prices in major Chinese cities rose 12.8 percent last month, a double-digit rise for the third straight month.
Experts also said the rules contained apparent loopholes that could be exploited by speculators.
China lacks a nationwide database on property sales, which means banks have no way of checking if mortgage applicants already own apartments in other cities, and higher down payments will have little impact on speculators who mostly pay the full value of properties in cash.
State media reported on Friday that people were even briefly resorting to divorce to acquire a second property, taking advantage of lower down payment and interest rate benefits offered to first-time buyers before remarrying.
Jiao said she was often told the properties she was interested in were sold out, leading her to suspect the developers were hoarding to keep prices high.
“The government has always been saying they would keep the policy unchanged, but they changed it whenever they wanted. We ordinary people just cannot do anything,” she said.
Hu, however, said he believed the government was more determined this time around to hold firm, as prices had become so out of reach for many ordinary Chinese that the measures were needed to keep a lid on social discontent.
Lina Wong (翁琳), managing director for east and southwest China of real estate firm Colliers International, said even more tough measures could be expected as curbing price rises had become a “political task” for the Chinese Communist Party.
New rules could include a property tax on residential housing to increase the costs for buyers keeping multiple apartments.
The government could also “raise the capital requirements for development or even restructure the fiscal revenue system of local governments to reduce [their] vested interests in land sales,” Wong said.
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to