22 March 2019
Xiamen, a picturesque harbor city in the southeastern province of Fujian, constantly attracts people from elsewhere in the province. Photo: AFP
Xiamen, a picturesque harbor city in the southeastern province of Fujian, constantly attracts people from elsewhere in the province. Photo: AFP

Where to find safe havens amid property jitters

China’s home market is under severe pressure amid policy curbs, lukewarm transactions and price cuts. It is feared that the downtrend may spread like a contagion to smaller cities, while top-notch urban centers like Beijing, Shanghai, Guangzhou and Shenzhen are more likely to cope with the headwinds. 

However, property investors may need to find more safe havens to alleviate risks. The question is how to gauge the resilience of other regional markets.

ValueLine {價值線}, a Shanghai-based financial magazine, has offered a new perspective. It selects the nation’s top 50 cities as measured by fiscal revenue and then rank them according to the aggregate inflow of non-locals. Figures are calculated by subtracting the household registration (hukou) population from the overall number of residents as of last year.

After setting aside the big four cities, Dongguan and Foshan, both in the southern province of Guangdong, come out as having the most number of non-locals, but most of these are migrant workers who are not expected to take up permanent residence in those cities.

Suzhou sits in the 7th position with an inflow of more than four million people from outside the city. The figure for Chengdu is 2.44 million, Xiamen 2 million, Wuhan 1.9 million, Ningbo 1.86 million, Hangzhou 1.79 million, Nanjing 1.77 million, Zhengzhou 1.62 million and Qingdao 1.17 million.

Zhang Dawei {張大偉}, chief analyst at realty agency Centaline Group, told China Business News that the bigger the influx of immigrants into a city, the more robust the local housing market can be.

Barriers such as hukou restrictions put up by local authorities to curb home prices can suppress the purchasing power of these immigrants, but Zhang believes the pent-up demand will remain as long as these immigrants continue to reside in these cities, and, when the home market is in a downturn, restrictions on non-local buyers are among the first to be scrapped and purchasing power can be released.

What’s important is to distinguish those cities with an overwhelming number of migrant workers like Dongguan and Foshan. For now, most migrant workers may not be able to afford a home in the cities where they work, but college graduates, factory owners and entrepreneurs who flock to major urban centers in their respective regions will surely want to own a home there.

Xiamen is a good example. The picturesque harbor city in the southeastern province of Fujian constantly attracts people from elsewhere in the province on strength of its status as the predominant city on the west coast of the Taiwan Strait. It is reported that the city’s resident population is now two times the number of its hukou registration holders.

A new home in Xiamen sells for 21,869 yuan (US$3,507) per square meter on average as of April, putting it among the nation’s top 15, despite the fact that its gross domestic product is just a fraction of that of top-tier urban centers.

– Contact the writer at [email protected]



EJ Insight writer

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