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Demand for best schools keeps neighborhood home prices high
By Cherry Cao |
June 13, 2012, Wednesday
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Print Edition
Print Edition
A NORMAL week for five-year-old Bob Jiang the past two years goes something like this: From Monday to Thursday, the boy lives with his parents and grandma in a 65-square-meter, one-bedroom apartment not far from his kindergarten in downtown Changning District, and from Friday through Sunday, the family moves back to their much more spacious, three-bedroom house in outlying Xinzhuang in Minhang District.
His parents, Daniel Jiang and Stella Yu, both Shanghai natives in their mid-30s, bought the small apartment near the Weining Road metro station for about 1.4 million yuan (US$221,518) in the summer of 2008. The couple, both graduates of top-tier universities in the city, were keen to secure a seat for their son in a nearby elite public kindergarten.
"We purchased our second home mainly for our son," said Jiang, a senior manager at a leading US IT company. "The kindergarten is one of the best in the district, with both good facilities and high-quality teachers."
Jiang and Yu are among the legions of young couples in Shanghai who spare no effort in seeking the best education for their children. They share the commonly accepted belief that good schools eventually lead to good jobs and happy lives.
Shortage of quality options
The annual National College Entrance Examinations taking place in China this month remind parents of young children how important a good start is to educational success. About 9.2 million high school students are taking the exam, known as gaokao, vying for about 6.9 million slots in colleges and universities. Parental pressure to do well at school starts at an early age and continues through the exams.
What makes parents like Jiang and Yu anxious is the shortage of quality education options amid an ongoing baby boom. So house-hunting for many is governed solely on where good schools are located, no matter what the cost.
In a sense, that makes good property investment sense, too, since proximity to prestigious schools will always keep house prices up.
"Prices of apartments that provide eligibility for admission to a nearby elite primary school remain quite firm and less vulnerable to market changes than houses of similar quality in other neighborhoods," said Li Chuang, manager at a Shanghai Centaline Property Consultants Ltd branch in Zhabei District's Daning area, where the Zhabei Experimental Primary School, a prestigious primary school in the district, is located.
"In this area, buyers need to pay an extra 1,000 yuan to 2,000 yuan per square meter for apartments and they are willing to pay the higher price," Li said. "It is not easy to find a satisfactory unit because of the tight supply."
Of the nearby residential communities where Li's branch acts as broker, six are within the admission zone for the sought-after primary school.
In one of the communities, built in the 1990s and comprising 1,200 apartments, only about 10 units are currently on the market, according to Li.
"More than 80 percent of the people visiting our office want to buy apartments here for their children's education, and prices of those apartments have been firm and will continue to be mainly due to an imbalance between supply and demand," Li said.
Century 21 China Real Estate, the city's largest realtor in terms of branch numbers, also monitors major residential projects eligible for admission to key schools around the city. It reports those properties have stronger performance than the overall market.
In Quyang in Hongkou District, for instance, transactions of existing homes plunged 47 percent in April from a year earlier, while sales of existing homes qualifying for enrollment to key schools climbed 6.7 percent.
By value, prices of existing houses in Quyang declined an average 4.28 percent in the month, while homes in admission areas edged up 0.3 percent, according to Century 21.
In Qibao in Minhang District, another highly sought-after area for parents linking homes to education, prices of apartments eligible for key schools was up 5 percent in April. Homes there usually sell for between 3,000 yuan and 5,000 yuan a square meter more than homes in non-eligible areas, according to Wang Tao, a Century 21 branch manager in Qibao.
Stable market of parents
"About 90 percent of buyers seeking apartments eligible for admission to key schools are end-users buying properties for their kids rather than speculators seeking quick profits, making it a very stably performing segment in the overall existing home market," said Huang Hetao, research manager at Century 21. "Inadequate supply, coupled with continuous demand from anxious parents, has made those homes a very good investment."
Parent Jiang said he didn't buy quite right at the start but he still has no regrets.
"Looking back, my only regret is that I should have bought a larger apartment so that my wife and I could have a bedroom to sleep in from Monday through Thursday, instead of having to sleep on the floor of the living room for two years," Jiang said. "Still, it was a good investment because I have a lot of home seekers who would be happy to buy my little house."
His parents, Daniel Jiang and Stella Yu, both Shanghai natives in their mid-30s, bought the small apartment near the Weining Road metro station for about 1.4 million yuan (US$221,518) in the summer of 2008. The couple, both graduates of top-tier universities in the city, were keen to secure a seat for their son in a nearby elite public kindergarten.
"We purchased our second home mainly for our son," said Jiang, a senior manager at a leading US IT company. "The kindergarten is one of the best in the district, with both good facilities and high-quality teachers."
Jiang and Yu are among the legions of young couples in Shanghai who spare no effort in seeking the best education for their children. They share the commonly accepted belief that good schools eventually lead to good jobs and happy lives.
Shortage of quality options
The annual National College Entrance Examinations taking place in China this month remind parents of young children how important a good start is to educational success. About 9.2 million high school students are taking the exam, known as gaokao, vying for about 6.9 million slots in colleges and universities. Parental pressure to do well at school starts at an early age and continues through the exams.
What makes parents like Jiang and Yu anxious is the shortage of quality education options amid an ongoing baby boom. So house-hunting for many is governed solely on where good schools are located, no matter what the cost.
In a sense, that makes good property investment sense, too, since proximity to prestigious schools will always keep house prices up.
"Prices of apartments that provide eligibility for admission to a nearby elite primary school remain quite firm and less vulnerable to market changes than houses of similar quality in other neighborhoods," said Li Chuang, manager at a Shanghai Centaline Property Consultants Ltd branch in Zhabei District's Daning area, where the Zhabei Experimental Primary School, a prestigious primary school in the district, is located.
"In this area, buyers need to pay an extra 1,000 yuan to 2,000 yuan per square meter for apartments and they are willing to pay the higher price," Li said. "It is not easy to find a satisfactory unit because of the tight supply."
Of the nearby residential communities where Li's branch acts as broker, six are within the admission zone for the sought-after primary school.
In one of the communities, built in the 1990s and comprising 1,200 apartments, only about 10 units are currently on the market, according to Li.
"More than 80 percent of the people visiting our office want to buy apartments here for their children's education, and prices of those apartments have been firm and will continue to be mainly due to an imbalance between supply and demand," Li said.
Century 21 China Real Estate, the city's largest realtor in terms of branch numbers, also monitors major residential projects eligible for admission to key schools around the city. It reports those properties have stronger performance than the overall market.
In Quyang in Hongkou District, for instance, transactions of existing homes plunged 47 percent in April from a year earlier, while sales of existing homes qualifying for enrollment to key schools climbed 6.7 percent.
By value, prices of existing houses in Quyang declined an average 4.28 percent in the month, while homes in admission areas edged up 0.3 percent, according to Century 21.
In Qibao in Minhang District, another highly sought-after area for parents linking homes to education, prices of apartments eligible for key schools was up 5 percent in April. Homes there usually sell for between 3,000 yuan and 5,000 yuan a square meter more than homes in non-eligible areas, according to Wang Tao, a Century 21 branch manager in Qibao.
Stable market of parents
"About 90 percent of buyers seeking apartments eligible for admission to key schools are end-users buying properties for their kids rather than speculators seeking quick profits, making it a very stably performing segment in the overall existing home market," said Huang Hetao, research manager at Century 21. "Inadequate supply, coupled with continuous demand from anxious parents, has made those homes a very good investment."
Parent Jiang said he didn't buy quite right at the start but he still has no regrets.
"Looking back, my only regret is that I should have bought a larger apartment so that my wife and I could have a bedroom to sleep in from Monday through Thursday, instead of having to sleep on the floor of the living room for two years," Jiang said. "Still, it was a good investment because I have a lot of home seekers who would be happy to buy my little house."
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