How the real estate bubble in China links to the traditional centering on education
- The “Examination Hotels” leased sofa in lobby and security offices to examinees at the same price as the hotel rooms.
- After signing the purchasing contract of one school district house, the buyer requested, “Now can you show me the house?”
- The school district house buyer recharged the seller’s cellphone only to call for an inquiry.
Residential prices in China grew fast in the past decade. According to Goldman Sachs, the total value of Chinese homes and developers’ inventory hit $52 trillion in 2019, twice the size of the U.S. residential market and outstripping even the entire U.S. bond market.
Education is one of the key factors that contribute to such rapid growth in China’s real estate market. Let’s first take a look at what happened recently during China’s graduate school entrance exam for 2021.
The “Examination Hotel”
The 2021 national graduate school entrance exam was held from December 26 to 28, 2020. There are 37 million applications for this test. Recently, more and more candidate for the graduate entrance exam chooses to stay in a hotel which is near to the examination place. Then, the term “examination hotel” emerged in China.
With the time of graduate exam close, the cost of some popular examination hotels increased dramatically, with the rates rising suddenly 5 times even to 10 times.
What’s more, some hotels wanted to gain more money from those examinees willing to pay anything for convenience. According to Chinese media Sohu,
The hotels maliciously broke their promise on their hotel reservations. They lease their sofa in a hotel lobby and security offices to examinees at the same price as the hotel rooms. They even lease some spaces that are not provided with safety, sanitation, and business permit for those students to stay overnight at high prices and gain excessive profit.
The problem is not just a single case. There are so many hotels that increase room rates sharply around the examination place. When you search for the room rates through travel APPs, you can find the prices of hotels and guesthouses are generally increased. The staffs of the more than 20 hotels that near the Nanchang Normal University, which is one of the 2021 graduate entrance exam place, tell the reporter “we have already lent all of our rooms and nothing left during this exam season.” The room rates increased by 5 times averagely then usually.
School District Housing
There is a Chinese saying that describes the great mass fervor of buying a house,
“Buying a house is just like grocery shopping.”
However, as an example, the experience of buying a house in Shanghai is much more terrible than shopping in a grocery store.
When you shopping at a grocery, you have the right and chance to pick what you want. You have the right to lay aside the food you don’t want to. The thing you can not understand is when you buy a house in Shanghai, you don’t get any chance to do your research, and ask yourself whether you like it or not. You don’t have any chance to pick the dream house for your life.
Nowadays, the price of school district housing has risen in at amazing speed. According to an article in Chinese social media Weixin, one person brought an apartment from one of Pudong area real estate without knowing anything about his apartment.
Even after his signing the purchasing contract, he still doesn’t know how the apartment looks like, how is the construction of this apartment, or how many neighbors he will have on the same floor.
It’s not his fault. In order to buy the house successfully, buyers go with sale consultants to the landlord’s house and typically have to wait for more than 3 hours to meet the landlord. In a recent case, a buyer couldn’t meet the landlord until mid-night and finally, the landlord came back before dawn.
They signed the sales contract at 2 am.
Another house buyer in the same housing district brought the house without any bargaining, fearing that the landlord would raise the price again.
After he signed the contract at the agent, the buyer asked the seller, “Now can you show me the house?”
Group-fighting for buying an apartment
In the other apartment sales center, the passageways of many levels are usually filled with people waiting to buy the property. One old man wanted to sell his house. The different agents brought numerous customers to visit his house for a whole afternoon.
After dinner, the masses of agents took different contracts back and wanted the old man to sell the apartment to them. It’s hard for the old man to decide and he asked for some time to think about it.
Then, the buyers began to attack one other to fight for buying the apartment. The landlord no longer thought about the sale, he turned to stop people from fighting each other at his home.
In another interesting story, a house buyer really wanted to buy a house from a seller. He could connect with the seller because the seller’s cellphone was not available for past due.
The buyer then helped the seller recharge his phone in order to make the important phone call.
Shortage in the school district housing market is the reality in Shanghai. In other for their children to attend good schools, Chinese parents have to buy the housing in the specific school district. Therefore, the buyers in general have no time to visit their future homes before signing the contract in the highly comparative sellers’ market.