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February 18, 2014

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Home » City specials » Hangzhou

Education drives Beijing property prices

By Li Hui and Ben Blanchard | February 18, 2014, Tuesday | Print Edition

Parents seeking a competitive edge for their children are pushing up property prices in neighborhoods near the best schools. Since the one-child policy has been eased, analysts expect the trend to continue, write Li Hui and Ben Blanchard.

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

Because public primary schools in many Chinese cities like Beijing and Shanghai 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.

“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 hutong (alleyways) near the Beijing No. 2 Experimental Primary School for six months without any luck.

Prices for existing 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 — neighborhoods 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.

The gap has widened over the past year, said Chinese real estate agency and consultancy HomeLink. Supply is also very tight, according to half a dozen parents.

China recently loosened its family planning rules to allow couples to have two children if one of the parents is 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.”

Not even a bathroom

Zhong, a 32-year-old electronics salesman, said he was ready to pay 2 million yuan (US$328,200) for a tiny home with one room the size of about four king-size beds, in a shabby alleyway near the Beijing No. 2 Experimental Primary School.

The home, which doesn’t even have a bathroom, sits in a rundown Chinese-style courtyard with other small homes. That would have been more than double the cost for a similar home in downtown Beijing, one real estate agent said.

But the owner still wanted more, so Zhong had to say no.

Other parents said they were willing to pay high prices and endure less than ideal living conditions to get their child into a top primary school.

Chinese families put enormous emphasis on education. Most parents believe choosing the right primary school for their child is vital to getting them into a good high school followed by a prestigious university.

“Education is very competitive,” said a parent surnamed Wang, father of a two-year-old boy.

“We don’t have the connections to get him into a good school, so we can only buy a school-area home (or xue qu fang),” added Wang, who declined to give his full name.

Zhong said he and his family had not planned to live in the courtyard home, about 3 kilometers from Tian’anmen Square.

But the purchase would have enabled him to move his household registration and thus meet the school’s requirement of three years of neighborhood residency before his daughter began classes.

“These owners know that what they are really selling is the school opportunity,” Zhong said.

In an effort to give families fair access to education, the government has for years required public primary schools to admit students from local neighborhoods in many cities.

‘Social inequality’

However, a nationwide system for ranking schools according to academic results has led to significant disparities, with key schools getting more funding as well as better facilities and teachers.

Indeed, experts say the quality of education varies greatly between the top primary schools and the rest.

“This is social inequality, public schools use government resources and funding, but most people can’t afford to buy a school-area home,” said Tan Fang, a professor at South China Normal University in Guangzhou, capital city of Guangdong Province.

The Ministry of Education said the government had sought to strengthen the quality of basic education “so the majority of parents will be content to let their children go to nearby schools.”

School-area housing has become a high-profile subset in real estate markets, not only in Beijing and Shanghai, but also in less-developed cities that have millions of people but fewer high-quality schools.

Most buyers of school-area homes are relatively well-off parents who give up bigger and newer houses to live near good schools, which are often surrounded by small, older apartments, said HomeLink analyst Zhang.

There are other concerns for parents.

In principle, children are admitted based on the address on the household registration, or hukou, of their family.

Many schools require families to have lived in the neighborhood for at least three years prior to enrollment. Relocating a hukou, even within Beijing, can take time.

And parents often don’t know if their child has been accepted until they reach school age.

More equitable education was highlighted in reforms announced in November, along with a relaxation of the one-child policy and many other economic measures.

The reform document called for narrowing the differences in the quality of education among urban and rural areas.

Change may not come soon enough for parents like Zhong. “I feel very tired and helpless,” said the weary father. “It’s a lot of pressure.”

 

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