Home Speculators Don't Give Up, They Move

Baoding is a city just to the south of Beijing in Hebei province. It was the capital of Hebei until moved to Tianjin during the Great Leap Forward. During the Cultural Revolution, the capital moved back to Baoding, but Beijing decided it didn't want the city's troubles repeated in Beijing,so it moved the capital of Hebei south to Shijiazhuang. Some background on the events is here and here.

Baoding always struck me as a potential suburb of Beijing, and now there is a plan now (mostly from the Baoding side) to integrate the cities by moving some government offices from Beijing. There's nothing concrete yet, but that hasn't stopped a rush to buy property in Baoding, sending home prices up by as much as 1000 yuan / sqm. Homes in Baoding sell for well under 10,000 yuan /sqm, which makes it very attractive to speculators who see prices converging with the Beijing city suburbs, where prices are far above 10,000 yuan / sqm.

Chinese media coverage has been mixed, which includes highly critical. Here's the header for the iFeng page devoted to the topic:

The farce is the sudden rush to buy property and the fact that nothing has been approved in terms of Baoding integrating with Beijing. It is more than a rumor, but less than reality.

The top story on that iFeng site as of today is a government investigation into real estate advance sales. 保定楼市飙涨过后 政府严查违规预售商品房. Apparently some firms with only land permits and planning approval sold homes to buyers. Who are these home buyers?

Here's Caixin's coverage of the story.

Hebei Hopes to Turn Cities into Satellites by Pushing Them into Beijing's Orbit
Property agents in Baoding, in the northern province of Hebei, have been busy answering the phone lately. For the past few weeks, calls have come one after another.

Tong Yonghua, an entrepreneur and head of the Zhejiang Business Association of Baoding, said his organization has been showing around fellow businessmen from the eastern province over the past week and many of them were interested in buying apartments.

"Seven or eight of us association members have already put deposits down on some 50 apartments," said Tong, who is from Wenzhou, the unofficial entrepreneurial capital of the country. "This is the best opportunity in Baoding in years."
Wenzhou property prices have been falling for years due to the bursting of the housing bubble and Zhejiang is one of the epicenters of the current bubble's burst, yet folks are still lining up to speculate on property. There have been price cuts on new homes in many areas, but the whole housing market hasn't cracked yet except in some places such as the ghost city in Ordos. In terms of psychology, the media and average home buyer are turning pessimistic on housing, but the speculators are still pouring in.

The housing market in Baoding heated up after media reports that provincial officials in Hebei want to develop some cities into satellites of Beijing, and Baoding might host some central government offices.

A Hebei official has said the idea is still just that, and that the central government has not approved anything.

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