China’s Real Estate 2019 | Is it too expensive? | how do average people afford it?

China’s Real Estate 2019 | Is it too expensive? | how do average people afford it?


What’s going on guys, this is Simon again. this week let’s talk a little bit about
China’s Real estate, shall we? I just passed 1600 subscribers today. I saw comments and feedbacks from all over
the world, that’s amazing guys, I guess that is the real magic of the Internet. Thank you so much, you guys are awesome. I am very grateful for all the love and support. I know a lot of you guys have heard news about
China’s real estate here and there, like the housing bubble and ghost city and some
of you probably want to know more. so this week, as a local average Chinese,
let me tell what I think about the real estate in China. First thing first, for average people, are
the housing prices too high to afford? Well, it is not an easy question to answer,
because China is huge and the housing prices vary a lot between different cities. let’s just focus on first-tier cities first,
take Shanghai as an example. According to the National Bureau of Statistics
of China, the average income in Shanghai is around 9,300 US dollar per year. As stated by ANJUKE, one of the largest Real
estate agents in China, the average housing price is about 7,200 US dollar / per square
meters. According to the Shanghai Residential Housing
and Property Report, the average apartment size of permanent residents in Shanghai is
71 square meter. So after some calculation, the average apartment
usually cost around 511,000 USD. It takes an average guy to work for 55 years
without spending a penny to afford one. Let’s compare that to one of the most expensive
places in the United States, San Francisco. Based on the data from Zillow, the median
home value is 1,350,000 USD, and the average salary is about 87,000 USD / year, which means
A dude working in San Francisco will spend 15 years’ salary to get a house. Well I guess it’s not too bad for us, we
just need to work 40 years more There is one more thing I think I need to
mention, Compared to San Francisco, Shanghai is Massive, Here is the size comparison. the size of San Francisco is only similar
to the size of the city center of Shanghai, Which is about the size of the green area. If we only take the green area into consideration,
the average housing price will be much higher, most newly built apartment in the city center
cost more than 1 million dollars and 2 million is not uncommon. At the end of the video, I will show you how
an average apartment looks like in Shanghai. However, 20 years ago, the Shanghai housing
price was not that crazy. you can get a decent apartment for about 30,000USD. Although back then people earn less, it only
takes 15 years to buy an apartment, not 55 years. so what are some of the factors that cause
the jump of the housing price in the big cities? Well, personally, I think there are several
elements that might contribute to the rise of the housing price. First of all, millions of migrants from rural
areas have moved into big cities for better opportunities. and you know in China, it is not only a tradition
but also a requirement for a couple to have their own apartment before getting married. Although new apartments keep popping out,
the supply simply can’t catch up the demand. Second of all, for the last 20 years, real
estate has always been the best and safest place for people to invest. The stock market is too risky and complicated. Banks don’t give you enough return. So People with extra money all start buying
second and third apartments, which keep driving up the demand. and finally, in China, since GDP is one of
the most important KPIs for the government, and the real estate is a key driver of China’s
economic growth, The government kind of enjoys the rise of the real estate and didn’t make
regulation earlier to stop the housing price from skyrocketing. Although now, multiple major cities have implemented
regulations to prohibit people from buying multiple apartments, the price has already
gone too high. Once the bubble is already there, there is
no going back. The government doesn’t want the housing price
keep going up, but they also have to very be careful not to let the bubble burst, which
would be an unimaginable nationwide disaster, I don’t even dare to think of it. you may wonder if the housing price is so
high in cities like Shanghai, how do average young couple afford it? The answer is: our parents pay for it. It’s Just impossible for average young Chinese
couples to afford an apartment in Shanghai. At least my friends who bought their apartment
for marriage all have received some sort of support from their families. If the parents are rich, then their family
probably already have multiple apartments, so there is 0 issue for them. If the parents aren’t rich but making a decent
salary, then the parents will pay for the downpayment of the apartment, and the young
couples will pay the rest of the mortgage in the future. What about the parents without any saving? Well, a
lot of times, those parents will sell their own apartments and move to a cheaper place,
so they can get some money for their kids. I guess my western audiences will not be able
to understand why Chinese parents are willing to make so much sacrifice for their kids. I don’t think the next generation of Chinese
parents are willing to do the same thing for their kids, but at least for right now
I have to say we have the best parents in the world. in the future, I will make a video about it. Now let’s take a look at third and fourth-tier
cities, where housing is much much cheaper, you can find apartments which only cost 30
or 40 thousand dollars. However, I don’t recommend anyone to invest
an apartment in those cities because the supply is much higher than the demand. I have been to several small towns in Zhejiang
for the last couple of years, I was blown away by the huge number of newly built apartments
building. Nevertheless, most of these apartments are
empty. The majority of young people have moved into
a bigger city because you can’t find a good job and there is no decent school or hospital
for your kids and family. But the weird thing is that people still keep
buying them. I really don’t understand, I just really
can’t see any potential guys. I mean seriously, where do you find so many
people to stay in all those apartments? I guess everyone is thinking that the housing
price will never drop. What will happen to the housing price
in the future? Well, I don’t want to make any reckless
prediction, since no one knows what will happen in the future, but let me tell you what I
think, I could be wrong though. Personally, I am not very optimistic about
those apartments in 3rd and 4th tier cities. There are just too many of them and I really
don’t know who is going to stay there in the future. For the big cities, if people are still coming
in and the overall economy is stable, Remember those two things are the prerequisites, I
would say the price will probably gonna stay there for the moment. And you know we have the most powerful government
in the world, I am pretty sure they will come up with any measures to make sure the price
is stable because many people’s lives are depending on it. However there is a trade war between the US
and China, that’s some bad news for us, which add more uncertainty to the real estate
industry. so I really don’t know guys, I guess only
time will tell. Okay, I think that’s it for today’s video. If you like my video, please hit the thumbs
up button. If you want more contents about China from
a Chinese, please subscribe to my Channel. Thanks for watching and I will catch you next
time. Here is what a relatively old apartment complex
looks like from the outside. The place is about 5 minutes’ walk from
the nearest subway station, and it locates near Zhongshan Park. the location is not at the very center of
the city, but it is considered to be in the downtown area, so I will say it’s decent Here is a list of apartments that are on sale. The average price is around 9073 USD / square
meter. The total apartment price will be different
depending on the size of the apartment. let’s take a look at the first apartment,
you get 2 bedrooms, 1 living room and 1 kitchen and 1 bathroom. the total price is around 520,000 USD. yeah
I know it looks shabby inside, but most Chinese people will spend some money to renovate the
place before they move in. Oh, I more thing, the apartment doesn’t
have an elevator, In China, a lot of old 6-floor apartment buildings don’t have an elevator
So if you live on the sixth floor, I guess you can expect to do a lot of exercises. Let’s take look at a better apartment complex,
This apartment complex is just next to the previous one, but this one has a slightly
better location since it is next to the river. you can see the surrounding is much better,
you have an underground parking garage and a lot of trees. but of course the price is higher. The average price is around 12,000 USD / square
meter. most of the apartments here are around 1.5
million Dollar. Let’s take a look at the first one as well,
you get 2 bedrooms, 2 living areas, 1 kitchen, and 1 bathroom. This one looks much better than the previous
one. of course, it is also way more expensive. the price of this one is about 1.38 million
dollars. okay guys, what do you think about the apartments
in Shanghai? Is it more expensive than the place you live
in? Please leave your thoughts under the comments
section below.

100 thoughts on “China’s Real Estate 2019 | Is it too expensive? | how do average people afford it?

  1. Yo man, cool video. I enjoyed it. We can tell you're reading off a script though. Would love to hear you in a more natural way. Maybe study and practice reading bullet points, that'd help out a lot man. Anyways, keep it up and wish you a lot more growth!

  2. Congratulations on passing 2,000 subscribers. I am here because ADVChina mentioned you on their new podcast. Thank you for the video.

  3. 聽說 你買大陸的房子使用權只有七十年 是真的嗎? 既然如此 用租的就好了 不是嗎 ?

  4. We had bubble burst here in Brazil a few years ago, to avoid the 2008 crises they cut taxes on electronics and construction, initially is always awsome, but when the government money deplete problems starts, and then you see all that demand was an illusion that take rough years to normalize, so please Estate don't mess with the economy, you can't do this forever and when it does end hurts a lot.

  5. Great job covering this topic! Congratulations on 2k! I look forward to more vids in the future. I live near SF and to us Americans it's too expensive lol. It's crazy to think that it's more than twice as much in Shanghai! That's crazy! I've always wanted to go there tho

  6. If China cannot keep it's growth and exports flowing , it's manufacturing jobs will decline , most Chinese may try to sell there second homes to raise capital . China had an opportunity to be a part of the world economy , but still wants to keep it's country closed off and does not want outside corporations competing on it's home turf , plus it taxes imports at such a high rate . When you look at the CCP efforts to steal new technology from other countries and the way they depict foreigners as being bad and evil , it's doesn't seem things are going to improve , China has isolated it's self .

  7. The Chinese government has made quantitative easing a regular thing. They are only delaying the crash and making it bigger. Investment bubbles happen but they are amplified and made unstable by debt based financing. I recommend you buy some bitcoin or invest in some gold.

  8. Phoenix, AZ is one of our next bubbles in the US as well as many other cities. I have lived in the metro area over 30 yrs and now I'm getting priced out. I fear the coming recession will make things even worse in the US as when the bubble breaks more 'investors' will hoover up cheap underwater mortgages and repeat the 2008 fiasco. Thanks for your insight on China Simon. Its invaluable as the media doesn't do a good job of showing the Chinese side of the Trade/culture/geopolitical tensions going on at the moment.

  9. Nice video Simon! Would like to see some videos about Chinese society if you have any interest in that topic! Keep up the good work regardless! 😀

  10. Mr. Simon Yu, you are a very remarkable and very courageous young man. No
    propaganda, just facts and personal opinion. It’s very rare to see that in
    China. And it's very valuable when young people like you can openly discuss the
    issues that concern them. China desperately needs men like you in charge.

  11. As my understanding that buying a house in mainland China does not mean you can permanently own the house and land. You can only possess the real estate for certain period of time. The regulation has been changed?

  12. Hello Simon Yu, ADVChina send me on over here, and I'm glad he did. I love the fact that I get to hear a native Chinese Man share his knowledge, and his experiences … Awesome, great video!

  13. China's close to the point of having a declining population. I would be surprised if there's not a significant correction to real estate prices as that plays out.

  14. you should look at what you get in the usa for that price compared to china, its not 72sm because that is to small for most people to live in.

  15. A friend in Shenzhen lived in an older apartment building, without an elevator. She lived on the eleventh floor, if I remember correctly. We stayed with her several days, and climbing that many stairs every time we went out was hard! But it was a nice, big, two bedroom apartment. I don't know what the rent was. I think rents in Shenzhen are generally high. Most younger expats seemed to prefer sharing an apartment in order to afford a nice place in a good location. In NE China, rents seemed low in relation to the selling price. Traveling by train at night, you would often see big new high rise apartment buildings with only a very few lights on…apparently mostly vacant. Well, people have been predicting for many years the housing bubble would collapse…and it hasn't. For the sake of friends and family I hope property values remain strong.

  16. I'm curious: you mentioned migrants moving into the big cities might be a contributing factor, but are migrants from other provinces allowed to buy apartments in the first-tier cities, even with the "hukou" (戶口) system? Thanks!

  17. That’s too expensive. You spend your entire life just paying for a space to sleep in. I guess life is not easy for an average person. In South Africa that kind of money can buy a 1 mansion + 1 beach house + couple of sports cars 😂😂😂

  18. Another great video. I really like how you keep things simple, not over-edited or fake. If you're ever in Kaohsiung, Taiwan and need a place to stay I'd be happy to lend you my guestroom 😀

  19. Great investigation. Housing in Shanghai is impossible for an average citizen of China. In Canada we have something called the "green belt" problem where housing in the city center is too expensive and doesn't suit the needs of the average Canadian. This leads to massive suburbs with huge houses an hour+ drive away from peoples' work place. The problems that come with this are related to traffic and lack of business in downtown areas.

    I will say that a lot of housing in China is subsidized. For example, government workers usually have rights to buy housing in specific communities. Universities will build housing for their teachers to buy at a fraction of the cost. Many other jobs, even farmers, will have subsidized housing options.

  20. Did you record this at a museum in Shanghai? The red structure in the background looks incredibly familiar. Took photos of my ex-girlfriend there during our first date.

  21. Simon is being very kind😅 The truth is many Chinese girls won't even date a guy who does not own an apartment (or who's parents own a local apartment). With no apartment, a Chinese guy hardly stands a chance getting a girlfriend- even if they are wonderful and hardworking in every other way. Of course, I disagree with this, but most Chinese girls won't go against their parent's wishes- and Chinese parents expect a prospective suitor to have or pay for the house (although sometimes the girls family will help out). So for most Chinese men- no apartment = no sex, which is enough to motivate anyone haha. But yes, not a good thing and quite unfair to put the burden on them.

  22. Congrats on passing 2000 subscribers! Can you talk a bit about 2nd and 3rd tier cities as well? I believe the prices are significantly lower, as are the salaries. Love the content – keep it up! 谢谢侬!

  23. $$$$hangai, especially with the trend of Hong Kong developer projects increasing in the mainland, like Raffles in Chongqing

  24. Hey Simon, mind giving my Chinese girlfriend a call and telling her that apartments in China are too expensive, lol? Btw, most of my college English students do not want to get married because they say houses are ridiculously overpriced. In your video you never mentioned the poor construction quality and that real estate here ages poorly.

  25. Shanghai apartments are really expensive! I live in a Tier 2 city where apartments cost about $1400-2000 per square metre. House prices went up a lot until 2018 and apparently now they are stable or falling slightly.

  26. Im here because of ADVchina, subbed and trying to catch up with your videos. So far so good. love it

  27. I thought same thing. Big-tier cities like Shenzhen, Shanghai, Beijing will be okay and stabilize as incomes will rise. Gov't institutions, companies, all there. Other cities, especially in interior, will do poorly.
    Real estate collapse is really biggest nightmare for China. The instability and chaos that happens, can't imagine what would happen. Trade war, IP theft, South China Sea aren't the biggest concerns. The property bubble is bigger threat and I think the government knows that. So they're trying whatever they can to stabilize.

  28. You not mentioned that in China, you are owner for 70 year's, everywhere in the world, the apartment is for life for you.
    And the lack of quality and absolut not maintained, i live in one of the 10 property brand (Vanke, Gemdal, KWG …) my tour is less than 10 year's but in look like 30 year's in my country, you have ceramic from the roof, ready to go down, nobody fix, they just wait that's kill somebody, you have some crack on the wall, it's cost a few yuan to fix now, but they wait the wall go down to fix. I say my wife, we need to sell it before 20 year's, after, you need to change the elevator, and many others, he will cost to much, better buy a new apartment.

  29. Hey man, im moving to Beijing in august. I used to live near Guanzough last year, but i have got a job in Beijing and am really looking forward to going back to China! Im starting to learn the language but i still haven't figured out the humour and discourse features of chinese! Any chance you could shed some light on the features and differences in relationships and conversations in china! Really liking the stuff buddy, keep it up!

  30. 非常感謝ADV推薦你的頻道!超級贊👍要是我十五年前有了像你這樣的一個朋友就好了!又聰明又客觀,加我微信吧!用戶名為andygoldstein

  31. Simon, You may learn a lot if you research the US real estate bubble of 2008. Value to income multiples were no where near the values you cite for China. The decrease in RE values ruined many people and families. It has since recovered but still not near your multiples. Also in China, as I understand it, you cannot "buy" any real estate. All you can do it is rent it from the government for 99 years. In that sense the real value of US RE is vastly greater and there is really no comparison. Because of that real estate can be left to children for generations to come. Because of that alone the Chinese financial system would never be tolerated here.

  32. Simon, You may learn a lot if you research the US real estate bubble of 2008. Value to income multiples were no where near the values you cite for China. The decrease in RE values ruined my people and families. It has since recovered but still not near your multiples. Also in China, as I understand it, you cannot "buy" any real estate. All you can do it is rent it from the government for 99 years. In that sense the real value of US RE is vastly greater and there is really no comparison. Because of that real estate can be left to children for generations to come. Because of that alone the Chinese financial system would never be tolerated here.

  33. Simon, You may learn a lot if you research the US real estate bubble of 2008. Value to income multiples were no where near the values you cite for China. The decrease in RE values ruined my people and families. It has since recovered but still not near your multiples. Also in China, as I understand it, you cannot "buy" any real estate. All you can do it is rent it from the government for 99 years. In that sense the real value of US RE is vastly greater and there is really no comparison. Because of that real estate can be left to children for generations to come. Because of that alone the Chinese financial system would never be tolerated here.

  34. Got referred to your channel by Winston(Serpentza) and C-Milk.
    Love how matter-of-fact and clear you are about some of the complexities of China, it's very refreshing.
    Please stay safe, as I want to see much more content from you!

  35. love the video, always nice to see local people sharing their culture especially since there are so few chinese people on YT.

    just a couple of suggestions since you are such a new channel.

    1. you english is actually too good so you can speak super fast and fly through topics that could use more time and often more emotion, for example giving the facts about taking 55 years salary to pay off a home is great by itself but you don't stop and reflect on just how insane that is.

    2. To make the production quality higher and appeal to a wider audience try to do something in the video like how ADVchina ride on the motorcycles to show people what they are talking about or even just walk down the street with a gopro or even have lunch at a restaurant.

    but overall great work for a new channel as it doesn't seem like you have any previous editing or filming experience!

  36. On a recent visit to China (Beijing, Xian, and Shanghai) I was blown away by how modern the city was. But something didn't add up to me, nice imported cars and expensive apartments how do people afford it, your video answers my questions.

  37. Hello from Australia, I live in Bracken Ridge, Brisbane, Australia. My home is a brick and tile, one level house, about 220 mtr2, on land 600mtr2, 4 bedrooms, 2 bathrooms, 1 car garage, value $500,00 AU, about 2.8 mil Yuan. Yes, 15 times annual income is not sustainable. The market will crash, no matter what the government does.

  38. Awesome video Simon. I agree with you, Chinese parents are generally the most dedicated and helpful parents. However sometimes it goes a bit too far, with the "little emperor" syndrome and "my dad is Li Gang!" syndrome. Looking forward to watching your next video.

  39. Housing price issue in China is insane, I just can't imagine how the middle-class is gonna survive in this city with the majority of their income paying the mortgage. It's a dilemma for the government as well, some people wish the price to drop but others want the opposite. Let's just wait and see the price bubble is gonna stay or burst.

  40. really interresting, thank you for sharing your insight with us. I live in Paris in the 13th district (near La-Butte-aux-Cailles), i'm a student and i'm paying a rent of 700euro/month (all charges) for a 12.5m² studio, just in front the subway station. in shanghai city center for the same kind of basic studio, how much do you think i would be paying? ps: in France the gouvernment give me 200euro of housing aid because i'm a student so i'm really paying 500euro/month

  41. They are way too much expensive than the place I live. You can buy an apartment from 1 Million Dollars but they are next to the beach, malls and they are all new, 1 or 2 years. But you can buy a house inside the city from 80,000 but they are really big 160 m2 ground and maybe double of construction. And you can buy a house in the suburbs from 20,000 Dlls wich I dont really recomend. They are small, too many people, not really the best construction, but they work.

  42. It would seem that the best strategy is: 1) Find a way to make good money in any city. Maybe working online. 2) Own a place in a first tier city, but rent out for income. 2) Own a place in a third tier city, and live in that to keep expenses low. I’m sure there are other cultural factors preventing such a plan, but it would be a good strategy in my opinion.

  43. Average salary in Shanghai is MUCH more than 9,300 dollars a year. It's about 18,000 USD in Shanghai and 19,000 USD in Beijing. Then when you take qualified professional salaries into account it's probably twice that. Then you take into account joint income. So yes housing is not affordable in big cities for the poor/working class, this isn't an issue isolated to China. However the white collar class can definitely still buy real estate.

    The average salary in the whole of China was $12,000/year and you think Shanghai is below this?

  44. Crazy expensive. Much like Hong Kong, very little Square footage or the money. I live in a relatively expensive part of the US: San Diego… Not as expensive as SFO but still. The good news is the salary range is decent. Thanks for the vids. Great work!

  45. Chinese American here! Quite Ironic I'm following Simon bc of Winston and Matt! Currently they're mired in their battle with nationalist Chinese Netizen! Even me who's totally believe in western democratic value with it some flaws after living in America 34 years, I'm increasingly tired of them!(not because of their stand) It's very much like we here in US fights btwn left/right, religious/atheists… different interest groups,you name it, wasn't going anywhere! I just want to educate myself about China! (3rd genChinese diaspora) If every videos is same topics why would I want to keep going back! Since I have pretty much experience both culture half of my life each! Yes I get it! I can tell you two cultural is very hard to reconcile! Like a couples constantly trying to prove who's right, who's wrong or I can change you on my term idea! Ain't gonna work! Culture change/progress doesn't happen on you command!Just think about USA has to fight for every "rights" (women had to wait 143 years), yeh yeh I understand it's 2019 now! There's example to follow! right now China politically is on a backward trajectory, Is paranoia of CCP internally justified and Trump-conomic correct! I don't know! As for China, My hope is they can amend all the social/economic/environment ills and creat Institutions (which the west started a few hundreds yrs ago) and get back to right direction. They pretty much know manufacturing base economy is winding down! (Trump's BS abt bring them bk here is just politic) they're going to Mexico, Vietnam, Bangladesh…so forth) It's economic! What ever people caught up in now! Just cool! And we'll know 5,10 yrs from now, what install! Sorry for the rent! Now I'll go back to see what normal people (Simon) do! 🙂

  46. The house price has become the Chinese capital reservoir just like the stock market. In the past few days, the reservoir has leaked and the fruit market has gone.

  47. What makes you think you are a average chinese guy? I think you are a very priviliged, above average chinese guy.

  48. It's a problem all over the world Simon all our governments building a economic system of off property it's a system that's not working for the people it just serves investors

  49. I think there must be a shift in Party thinking towards allowing Westerners to purchase land and housing within China. With outside funds, China can mitigate the "official" trade problems, (Americans much like Chinese look for deals too.) additionally, this will promote tourism within China, perhaps even in the third and fourth-tier cities, because of the cultural differences in Americans that view the countryside as a relaxing place. This situation in China is akin to the housing bubble started in the 90s and then crashed in 2003. (here in the US) There will be a crash. The question is how and when the government will deal with it.

  50. Brave Simon, Good job in explaining the real estate situation in China. My guess is the Government will continue to support the growth in spite of the fact that the prices are high. The bubble is real but will not burst due to this governmental support. Too much to loose. I hope there will be correction processes going forward to safe guard the future of all Chinese citizen.

  51. Because the high housing price, many companies have moved to suburb areas. I don't see any new companies move to BSGS, and young people should move to tier 2 cities

  52. Here by SerpentZA's recommendation. As a rule of thumb, the price of property should not be much more than 20-30 times its annual rental value. If the ratio is larger than this, then the price of ownership is too high, and it is better to rent than to buy. Conversely, when the ratio is lower, then it may be a good time to buy property.

  53. Every capitalist market I've ever known has had large drops in prices at least once in awhile. Nothing goes up forever nonstop, right?

  54. im so glad that Chinese you tubers are looking out for each other. there is still so little coming out of china. I think the world would have a better view about china if they were allowed to say hi to the world. there is a lot of misunderstanding about china and no one is there to say what is going on. I have already thanked c-milk for taking care of there little brother. i have been a member of there you yube family for about 7 years and they make my feel proud to know them. its nice to add you to my you tube family. keep up the good work!

  55. Mate, you gotta slow down when you are talking.. It seemed you're tensed and rushing through the whole thing.. You have made very good points though. Please try to slow down like the other videos that you put up.. This way it can sink in when you attempt to convey your message to us… Thanks heaps 🙂

  56. You should look at buying in the Greater Bay Area. Most of the overflow from Hong Kong, Shanghai, Beijing,etc. will buy in the Greater Bay Area because it’s the next most affordable places. You need to remember there are 1.4 billion people in China. It is not like the US with only about 300M people so you will have deserted homes and larger homes. Previously most chines family all lived with each other. Now the trend is to all move out and find their own homes. There is definitely the demand but people will eventually find deposits to buy them.

  57. Our parents would make the sacrifice too if they could afford it. I know no parents who wouldnt help theyr children if they can.

    Prices are skyrocketing because corporations (and theyr owners) want to get rich over night. Also if renters have to work long hours to pay the rent then they do not have the time to complain about the decaying political system which is again caused by the same corporations.

    In my country we had rent limits which corporations lobbied (lobbying = bribing thus should be prosecuted) to remove. Now prices are skyrocketing and politicians act as if they dont know why this happens.

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