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SHANGHAI: Newspaper journalist Li Daquan made a bold decision two years ago to buy a flat in his hometown in Sichuan province, even though he was living and working in Shanghai.
After working for the Chinese-language newspaper China Times in Shanghai for more than 10 years, Li realised that his hope of one day owning his own home in the city was growing fainter by the year.
"My salary increment never caught up with the growth of Shanghai home prices," Li said.
According to international property consultant DTZ, prices for new homes in tier-1 cities on the mainland rose by 35.4% year on year to 18,853 yuan (RM8,740.50) per square metre last year, compared to 26.1% and 7,015 yuan per square metre in tier-2 cities.
The mismatch of his salary and Shanghai home prices was one reason for Li's decision, but the other was his confidence that home prices in inland cities would continue rising because of the nation's strong economic growth.
So in 2009 Li bought a 100-square-metre flat in his hometown, near Sichuan's Mianyang city, for 120,000 yuan. "The value of my flat has since risen by 50% above the price I paid," he said.
Li's experience is typical of the growing numbers of mainlanders who have worked in first-tier cities for a long time but are still unable to buy flats there. As a result, a growing number are buying flats in their hometowns in second- and third-tier cities, helping to fuel demand in these markets.
According to a recent online survey on mainland home buying by Soufun.com, more than 50% of the interviewees planned to buy in second- or third-tier cities since they found prices in big cities unaffordable.
DTZ agreed. It forecast that buying interest will be more inclined to tier-2 and tier-3 cities where there were fewer restrictions and, at the same time, where markets had benefited from the nation's urbanisation policy.
According to DTZ's survey, sales of new homes in tier-1 cities dropped annually by 41.8% last year, and in tier-2 cities by 20%. "Buyers in tier-1 cities have become more cautious as prices are relatively high, and local ration orders have also suppressed purchases," said Alan Chiang Sheung-lai, head of residential property for DTZ.
Activity in tier-2 cities, on the other hand, remained active, said Chiang, and DTZ expected a shift of buyer interest to these markets. New supply would also boost sales, more so in tier-2 cities, he added.
Newly begun construction in tier-2 cities was up 35.4% year-on-year last year, as local governments took serious steps to deal with delayed construction projects and, in many cases, regained possession of idle land, said Chiang.
"New supply is now expected to increase in 2011, which will also boost sales. It is expected that new homes sales in tier-1 cities will rebound by 15% and tier-2 cities by 25% this year," he said.
"Although price growth in 2011 is expected to be slow, tier-2 cities will outperform tier-1 cities," he added.
DTZ forecasts that new home prices for tier-1 cities will be up by 5% and tier-2 cities by 8% this year. The property market will benefit from continued growth in the economy and improving infrastructure across the nation, which will combine to maintain a positive outlook for the market. — SCMP
After working for the Chinese-language newspaper China Times in Shanghai for more than 10 years, Li realised that his hope of one day owning his own home in the city was growing fainter by the year.
"My salary increment never caught up with the growth of Shanghai home prices," Li said.
According to international property consultant DTZ, prices for new homes in tier-1 cities on the mainland rose by 35.4% year on year to 18,853 yuan (RM8,740.50) per square metre last year, compared to 26.1% and 7,015 yuan per square metre in tier-2 cities.
The mismatch of his salary and Shanghai home prices was one reason for Li's decision, but the other was his confidence that home prices in inland cities would continue rising because of the nation's strong economic growth.
So in 2009 Li bought a 100-square-metre flat in his hometown, near Sichuan's Mianyang city, for 120,000 yuan. "The value of my flat has since risen by 50% above the price I paid," he said.
Li's experience is typical of the growing numbers of mainlanders who have worked in first-tier cities for a long time but are still unable to buy flats there. As a result, a growing number are buying flats in their hometowns in second- and third-tier cities, helping to fuel demand in these markets.
According to a recent online survey on mainland home buying by Soufun.com, more than 50% of the interviewees planned to buy in second- or third-tier cities since they found prices in big cities unaffordable.
DTZ agreed. It forecast that buying interest will be more inclined to tier-2 and tier-3 cities where there were fewer restrictions and, at the same time, where markets had benefited from the nation's urbanisation policy.
According to DTZ's survey, sales of new homes in tier-1 cities dropped annually by 41.8% last year, and in tier-2 cities by 20%. "Buyers in tier-1 cities have become more cautious as prices are relatively high, and local ration orders have also suppressed purchases," said Alan Chiang Sheung-lai, head of residential property for DTZ.
Activity in tier-2 cities, on the other hand, remained active, said Chiang, and DTZ expected a shift of buyer interest to these markets. New supply would also boost sales, more so in tier-2 cities, he added.
Newly begun construction in tier-2 cities was up 35.4% year-on-year last year, as local governments took serious steps to deal with delayed construction projects and, in many cases, regained possession of idle land, said Chiang.
"New supply is now expected to increase in 2011, which will also boost sales. It is expected that new homes sales in tier-1 cities will rebound by 15% and tier-2 cities by 25% this year," he said.
"Although price growth in 2011 is expected to be slow, tier-2 cities will outperform tier-1 cities," he added.
DTZ forecasts that new home prices for tier-1 cities will be up by 5% and tier-2 cities by 8% this year. The property market will benefit from continued growth in the economy and improving infrastructure across the nation, which will combine to maintain a positive outlook for the market. — SCMP
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