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Forced into buying an apartment
By Dou Dou |
February 6, 2010, Saturday
|
Online Edition
Online Edition
AT long last, I will have to buy an apartment in Shanghai or elsewhere this year despite real estate bubbles everywhere. Buying into bubbles is definitely insane but I cannot choose to be sane.
My niece is getting married this year and my own mother is eying my hard-earned cash and nudging me -- in a soft but determined way -- to help buy an apartment for my niece for the wedding.
They all know I am "homeless" and a renter. They all know I would have to borrow at least one million yuan from a bank just to buy an apartment less than 100 square meters in some low-end part of downtown Shanghai. But they also know I haven't bought one yet, which means I have some cash at hand.
So my mother asks, is it possible for you to give some of your cash to your niece? Mind you, she says "give," not "lend." I say, why can't she and her boyfriend rent an apartment to start out, the way my wife and I do?
My mother says, you're different, you've been married so long. Do you want to see them break up because they cannot buy an apartment?
I say, I did not have an apartment when I was married nearly 20 years ago either and I still don't have one. Why should they break up just because they cannot buy an apartment?
My mother says, this generation is different, they're just different.
My niece is a good girl and I care about her, that's why my wife and I have decided to give her a surprisingly generous sum of money as a wedding gift that's enough to buy all the basic furnishings and home appliances. The amount is close to that given by upstart business people in Zhejiang Province to a relative who weds, and it's way higher than the average for a relative's wedding in Shanghai.
Show me your house
On hearing my mother's polite yet persistent request, I realized that my "surprising" gift would seem surprisingly small to my dear family members who expect me to help buy an apartment, not just fancy furniture or trendy home appliances.
So I will spend all my cash right away to buy myself an apartment and become a house slave. I am sane enough to know I am insane, but what can I do?
Society itself is insane: everyone wants a house, however poor he or she may be and however high the housing price may be.
You absolutely have to buy a house to get married these days, period. Make a proposal to a Shanghai girl born in the 1980s and chances are she will tell you: don't bargain with me, show me your house (and car).
Many of my young female colleagues and acquaintances in Shanghai have used their parents' hard-earned money to buy a wedding apartment.
Some parents are willing or happy to help, for sure, but it's irrational to collectively buy into bubbles in the false belief that China's housing prices will never fall.
Given so many irrational if not insane buyers -- blinded in part by that false belief fueled by real estate developers and in part by an urge to consume beyond their means -- cunning developers have no reason to lower their prices to reasonable levels even though supply of apartments increases. And in China's case, many developers have refused to increase supply, they have instead hoarded land to fuel public fears of ever-rising housing prices.
Left to its own, the market does not always work. Cunning developers always pursue profits, they don't care about society's overall progress.
So I was surprised to read the book, "A World of Wealth: How Capitalism Turns Profits into Progress," written by Thomas G. Donlan, an editorial page editor of Barron's.
The author says price gouging is good. After a natural disaster, he says for example, entrepreneurs left to their own impulses scurry into an area in need of power saws, lumber, gasoline and the like. They charge high prices because demand is great, and steep prices will bring more products until prices fall.
That's a sweeping statement at best. Moral issues aside (you shouldn't take advantage of victims of a natural disaster), he fails to mention that prices will probably never fall in the face of insane buyers who are an integral part of the free market the author so admires.
Ask me, or my niece.
My niece is getting married this year and my own mother is eying my hard-earned cash and nudging me -- in a soft but determined way -- to help buy an apartment for my niece for the wedding.
They all know I am "homeless" and a renter. They all know I would have to borrow at least one million yuan from a bank just to buy an apartment less than 100 square meters in some low-end part of downtown Shanghai. But they also know I haven't bought one yet, which means I have some cash at hand.
So my mother asks, is it possible for you to give some of your cash to your niece? Mind you, she says "give," not "lend." I say, why can't she and her boyfriend rent an apartment to start out, the way my wife and I do?
My mother says, you're different, you've been married so long. Do you want to see them break up because they cannot buy an apartment?
I say, I did not have an apartment when I was married nearly 20 years ago either and I still don't have one. Why should they break up just because they cannot buy an apartment?
My mother says, this generation is different, they're just different.
My niece is a good girl and I care about her, that's why my wife and I have decided to give her a surprisingly generous sum of money as a wedding gift that's enough to buy all the basic furnishings and home appliances. The amount is close to that given by upstart business people in Zhejiang Province to a relative who weds, and it's way higher than the average for a relative's wedding in Shanghai.
Show me your house
On hearing my mother's polite yet persistent request, I realized that my "surprising" gift would seem surprisingly small to my dear family members who expect me to help buy an apartment, not just fancy furniture or trendy home appliances.
So I will spend all my cash right away to buy myself an apartment and become a house slave. I am sane enough to know I am insane, but what can I do?
Society itself is insane: everyone wants a house, however poor he or she may be and however high the housing price may be.
You absolutely have to buy a house to get married these days, period. Make a proposal to a Shanghai girl born in the 1980s and chances are she will tell you: don't bargain with me, show me your house (and car).
Many of my young female colleagues and acquaintances in Shanghai have used their parents' hard-earned money to buy a wedding apartment.
Some parents are willing or happy to help, for sure, but it's irrational to collectively buy into bubbles in the false belief that China's housing prices will never fall.
Given so many irrational if not insane buyers -- blinded in part by that false belief fueled by real estate developers and in part by an urge to consume beyond their means -- cunning developers have no reason to lower their prices to reasonable levels even though supply of apartments increases. And in China's case, many developers have refused to increase supply, they have instead hoarded land to fuel public fears of ever-rising housing prices.
Left to its own, the market does not always work. Cunning developers always pursue profits, they don't care about society's overall progress.
So I was surprised to read the book, "A World of Wealth: How Capitalism Turns Profits into Progress," written by Thomas G. Donlan, an editorial page editor of Barron's.
The author says price gouging is good. After a natural disaster, he says for example, entrepreneurs left to their own impulses scurry into an area in need of power saws, lumber, gasoline and the like. They charge high prices because demand is great, and steep prices will bring more products until prices fall.
That's a sweeping statement at best. Moral issues aside (you shouldn't take advantage of victims of a natural disaster), he fails to mention that prices will probably never fall in the face of insane buyers who are an integral part of the free market the author so admires.
Ask me, or my niece.
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