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Pity single out-of-towners who can’t buy a house
By Doug Young

This week’s Street View shines a spotlight on Shanghai’s hyperactive real estate market, centered on the tale of an unlucky out-of-towner who got caught faking a marriage just so he could buy an apartment.

The story is at once humorous but also a little sad, as it exposes how ridiculous Shanghai’s real estate market has become. It also highlights some of the city’s tactics to try to cool the market, sometimes resorting to measures that seem strange.

The supporting cast of characters in this soap opera includes a relatively small number of wealthy people who are snapping up far more apartments than they need at the expense of others who really need places to live.

I encountered the phenomenon firsthand a few weeks ago when a friend told me about a wealthy acquaintance from neighboring Zhejiang Province who owned several dozen apartments in Shanghai alone. This poor landlord was lamenting his bad fortune because he couldn’t buy and sell properties as quickly as usual, since the market had suddenly slowed while people awaited a rumored government move to cool things off.

Needless to say, I had zero sympathy for that guy or the thousands of others like him, whose compulsive buying and selling have helped to drive Shanghai home prices to ridiculous highs, often twice as much as comparable properties in the West. In the meantime, ordinary people like the out-of-towner in my story, surnamed Chen, are watching anxiously and helplessly while most properties move beyond the realm of affordability.

It seems Chen had graduated from vocational school at his home in Zhejiang, then came to Shanghai where he worked for 10 years in the IT industry in Pudong. Like many people, Chen wanted to buy a home, but couldn’t due to a policy quirk that forbids unmarried people from outside Shanghai from buying properties.

That policy was just one of several measures to cool the market, where prices were rising at double-digit rates as recently as a couple of years ago. I can’t blame the city, but this particular policy seems a bit extreme and unfair. Another friend who is single and from outside Shanghai also complained of the policy, since it affects many of the young professionals like herself who want to pursue careers in the city.

But let’s return to our main story, which saw the desperate Chen team up with a couple of real estate agents willing to help in their own pursuit of a commission. To make a long story short, the agents helped Chen to get a fake marriage license, allowing him to purchase his dream home for just over a million yuan (US$163,416).

Unfortunately for Chen and the two agents, their scheme was later discovered. So not only did Chen lose his dream home, but he also got a criminal record that included four months probation. The two agents got similar sentences, though I don’t have much sympathy for them.

Unfair policy

I suppose I should commend the judge for giving Chen a suspended sentence, since the only reason he faked the marriage license was to circumvent the somewhat arbitrary rule. But the case should also be a good starting point for introspection by Shanghai city officials and the small group of wealthy property buyers who are responsible for the plight of Chen and many people like him.

The policy, in my opinion, bias against out-of-towners, who are denied a wide range of benefits given to people born in the city. The policies are relics of the old Chinese system of resident permits or hukou, which entitle people to benefits like subsidized healthcare in their hometowns only.

I found Chen’s saga both amusing for its clumsiness and touch of fake romance, and a bit sad for its desperation and implication that an out-of-towner’s money was somehow less valuable than that of a Shanghai resident.

My real hope is that the bubble in the real estate market will burst soon, allowing Shanghai to drop some of its draconian policies and heaping big losses on the wealthy speculators who caused the problem in the first place.

But until that happens, people like Chen will continue to be the victims, as they have to resort to fake marriage certificates and other schemes to enjoy simple “privileges” like being allowed to buy a home in Shanghai.

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