Home sellers in Baoding, a small city only a hundred miles away from the capital city of Beijing, haven't been this busy for quite some time.
People from cities including neighboring Beijing and Tianjin, as well as Wenzhou, home to most of the country's speculative buyers, have been flocking to Baoding lately, scooping up houses and stirring up its long-stable property market.
Average prices of new homes in Baoding rose by 4.8 percent from the previous month, the highest monthly growth seen among all 288 cities monitored by China Real Estate Information Corporation (CRIC).
The sudden upturn in the city's property market came in line with a report saying the city in northern China’s Hebei Province has been named by the central government as its “Deputy Political Center”.
Caijing, one of the top business and financial magazines in China, quoted an unnamed source as saying that a “common understanding” has been reached among Beijing, Tianjin and Hebei. The three regions together form one of the country’s most important economic circles in northern China.
A week after the report came out, the Hebei provincial government announced a plan to prepare Baoding for hosting some public institutions or ministerial departments that would be relocated from Beijing.
The announcement sent a shockwave across the city’s property market, pushing up prices in what was called by locals as “unprecedented”.
Some apartments have seen their average prices jump to 8,700 yuan per meters squared (1,400 US dollars), compared with 5,000 yuan (800 US dollars) just a month ago, triggering worries about over-speculation.
Xie Lusheng, a former policy maker at the Hebei municipal government, accused some groups of plotting to make profits by causing panics among consumers.
The National Development and Reform Commission (NDRC), the country’s top economic planner, implicitly dismissed the Caijing report by saying that it has never heard of a plan to build a “Deputy Political Center”.
Some believe impacts of the recent rumor on the city's housing market would be temporary and limited since the concept of building an economic circle surrounding the capital city has been floating around for decades without leading to substantive moves.
Transactions remained tepid amid rallying prices as statistics by Centaline, a Hongkong-based real estate agency, showed a daily average of 40 houses sold in the city after the Caijing report started circulating.
Newspaper the Beijing News reported that it would take at least 40 months for the city to sell all its existing inventory of houses, so the current rally won't last long. It posted this message on its official account on Twitter-like Sina Weibo:
Baoding property market: The sudden craziness. “Property prices are turbulent. Prices have been rising to what we'd expect three years from now,” a local Baoding resident with the surname Wang complained over the phone in April. “Property prices in Baoding have been stable, and we weren't in a hurry to buy property, but now due to the hype from the media and property developers, we are worried we won't be able to afford a house at all!” Many insiders have said the skyrocketing prices in Baoding are unsustainable.
Weibo user Chizhou Suren warned:
Property prices in Baoding and its surrounding areas have been skyrocketing, it's typical speculative craziness, or the final craziness before the storm!!!! Before you destroy it, you make a crazy scene first.
Yueying Shanhuwan complained:
Hehe, we in Baoding haven't benefitted from the move yet, but are now tasting the bitterness of not being able to afford a house.
Yingtou Xiaomao wrote:
When I first saw the news about Baoding, I suddenly thought of the so-called “international tourism island” plan proposed for Hainan province two years ago. Such a stunt will not change anything at an administrative level, but what it will leave in the end is a property bubble—-In fact, I fundamentally doubt these things were planned by property developers.