In Beijing housing market, education drives location

Sun Dec 8, 2013 4:07pm EST
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By Li Hui and Ben Blanchard

BEIJING (Reuters) - Zhong Jian and his wife are willing to pay double the going rate for a tiny home in a Beijing neighbourhood so their 18-month-old daughter will be eligible to attend a top primary school nearby.

Because public primary schools in many Chinese cities have to admit children who live locally, parents like Zhong are driving up property prices in areas that have the most popular schools. The trend is set to accelerate with a baby boom expected after China eased its one-child policy last month.

"I don't have a choice. I want the best education for my daughter and this is the only way," said Zhong, who has hunted in the alleyways near the Beijing No.2 Experimental Primary School for six months without any luck.

Prices for pre-owned homes and apartments in Beijing rose 19 percent in October from a year ago, a dizzying pace for those trying to get a foothold in the Chinese capital.

But the spike is far greater in the areas young families covet - neighbourhoods near the best schools, which are often clustered in the older parts of Beijing, not near sprawling new apartment complexes.

On average, pre-owned homes close to good schools are 50 percent more expensive than similar ones in comparable areas, and the gap has widened over the past year, said Chinese real estate agency and consultancy HomeLink. Supply is also very tight, half a dozen parents told Reuters.

China loosened its family planning rules last month to allow couples to have two children if one of the parents was an only child, a measure demographers say will apply to tens of millions of families.

"The new policy will widen the supply-demand gap for school-area houses in the next three to five years," said Zhang Quanguo, an analyst with HomeLink. "Prices will go even higher."   Continued...

A student walks along a street next to a school-area neighbourhood in Beijing, December 6, 2013. REUTERS/Iris Zhao