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The Chinese have a proverb that says, “Build a nest before attracting the phoenix.” Sticking with tradition, Tank Zhao had begun looking for an apartment as he planned to marry his girlfriend next year. Now the 28-year-old software engineer from Fujian province finds himself frozen out of Shanghai’s real estate market by a new prohibition on single nonresidents buying property in China’s second most populous city. “The policy is unreasonable; we aren’t speculators, we just need a place to live,” says Zhao. “Getting married first goes against our culture. I’ll have to explain to my girlfriend’s family that the Shanghai policy is what it is.”
Concerned about a housing bubble, Shanghai last year began limiting locals who have coveted official residency permits to owning two homes. However, nonlocals, who make up more than a third of the city’s 23 million residents, can own only one property. Unmarried nonlocals, who had been able to buy as long as they were able to document a year or more of tax payments, are no longer permitted to do so after the city toughened its curbs in June.
Photograph by Claudio Santana/AFP/Getty Images
China’s first-tier cities are the front lines of a government campaign to cool the real estate market. The drive had been showing signs of success: Nationwide, prices for new homes fell for nine straight months through May, according to real estate website SouFun Holdings. Yet they bucked the trend in July, posting the biggest increase in more than a year.
Zhang Lei, a blogger from eastern Zhejiang province who has lived in Shanghai for eight years, has set up an online discussion group to protest the restrictions on singles. The 31-year-old, who says she doesn’t plan on ever getting married, was ready to put down a deposit on a 3 million yuan ($471,000) home in northern Shanghai in June, she says. Then the government cracked down. “This is very, very irritating; it’s discrimination,” says Zhang, who boasts more than 110,000 followers on Sina Weibo, China’s Twitter-like microblogging portal.
Shanghai, with its own dialect, has some of China’s strictest population controls. To be classified a “local,” one must be born in the city to Shanghainese parents, be a skilled professional with residence of at least seven years (and tax receipts to prove it), or marry a Shanghai local and remain wedded for a minimum of 10 years. The residency policies fuel chauvinism by Shanghainese against newcomers and reinforce divisions between the two groups, says Wang Xiaoyu, an associate professor at Shanghai’s Tongji University. “Had the policies been based on tax payments, it would be closer to concepts of citizens’ rights,” he says. “Instead, we have the idea that locals come first.”
To get around the new rules, prospective buyers may try procuring a forged marriage license, says Lu Qilin, senior research manager at Shanghai DeoVolente Realty, the city’s No. 3 brokerage. Such licenses cost about 100 yuan, he says, adding that “compared with what they pay for a property, this is small money.”
The average age at which Shanghai residents get married has climbed along with housing prices. Shanghai men average 32.45 years and females 29.89 years when they wed, according to the city’s statistics bureau. That’s up from 28.64 years for males and 26.43 years for females in 2007. A standard two-bedroom apartment about 10 kilometers (6.2 miles) from Shanghai’s center costs about 3 million yuan—equal to 57 times the average annual wage of 52,655 yuan.
Prospective buyers in Shanghai and other Chinese cities may face new limitations once teams dispatched to the provinces last month to monitor the implementation of existing restrictions report back to Beijing. “If all the current curbs are not working, the government may have to be more hawkish in the second half,” says Alan Jin, a property analyst at Mizuho Securities Asia.
For Zhao, the programmer, the current rules are an obstacle—though not necessarily an insurmountable one. “I’ll now really have to calculate the timing: get a marriage license right away when I see the right property,” he says. “But that’s hard, isn’t it?”
The bottom line: Authorities in Shanghai, where home prices have tripled in a decade, are tightening restrictions on purchases.