With house prices rising all over China, home-purchasing groups have sprouted up in Shenzhen and flooded other regions.

Da Shan is a white-collar worker in Shenzhen of Guangdong Province, one of China's most developed cities where house prices have been growing at a breathtaking speed. Early this year, he visited Huizhou, a nearby city, to look at houses there, where he met a few young people having the same purpose of finding cheaper houses. Soon they set up an alliance through the Internet.

Since then, this group has expanded from only a few people to over 4,000. In addition, there are similar groups all over the city--including one organized by Southern Metropolis Daily--that travel to cities around Shenzhen, or places in the Pearl River Delta such as Guangzhou, Dongguan and Huizhou. A recent exhibition in Shenzhen, sponsored by Southern Metropolis Daily, attracted more than 10,000 Shenzhen citizens who came to look at the display of new houses in Dongguan and Huizhou. Real estate developers from the two cities even offered free coaches for Shenzhen citizens to look at prospective houses on site.

"People from other provinces buying local houses have contributed to the rise in house prices in some cities," said Qi Ji, Vice Minister of Construction, at a press conference held by the State Council Information Office on August 30. Some one third of the houses and over 50 percent of high-class commercial houses in Beijing have been bought by people from other provinces, he said.

House prices in Shenzhen rose from 5,000 yuan per square meter in 2004 to 10,000 yuan per square meter in 2006, and even shot up to 20,000 yuan in the first five months of this year. Unable to afford local property, Shenzhen citizens turned to nearby cities like Dongguan, well-known for its manufacturing industry. The once calm property market in Donghuan saw prices increase sharply, following the sudden influx of buyers.

"My company became well-known overnight," said Wang Yingjun, Deputy General Manager of Zhongyuan Real Estate Co., a local developer in Dongguan.

An analysis by a Dongguan real estate company revealed that the percentage of house-buyers from Shenzhen rose from 1 percent in January to 30 percent in June in Dongguan's Liaobu Town, and from 15 percent to 50 percent in Changping, another town in Dongguan. According to the Dongguan Housing Management Bureau, prices rose from 3,600 yuan per square meter in August 2006 to 6,864 yuan in July 2007.

A young man, who now earns over 4,000 yuan a month, has worked in Dongguan for seven years after graduating from university. He rents a house and expects to buy an apartment of his own at some point.

"I saved money," he sighed, "but the house prices are rising too fast and so I have to put off my plan."

Similarly, others in Dongguan have found real estate prices skyrocketing since the arrival of Shenzhen citizens who've bought up houses there.

House prices in Huizhou have followed suit. More than 60 percent of new houses in the two cities have been sold to Shenzhen residents.

In July, people from Shenzhen also began to buy houses in Guangzhou, capital of Guangdong. In addition, partly due to promotional exhibitions, some Shenzhen citizens have begun to buy property in provinces such as Guizhou, Hubei, Shaanxi and Hunan. Both Wuhan, capital of Hubei, and Guiyang, capital of Guizhou, held large promotional activities in early August in Shenzhen. As a result, some 100 Shenzhen citizens visited Wuhan and Guiyang to buy houses.

"I want to buy two houses so that when the prices rise, I can sell them to make some money," said Ms. Zhang.

Others agree with her, saying that the prices of their houses have risen by over 70 percent already.

Mr. Mao, a company's general manager, has bought two houses, one in Zhuhai, another city of Guangdong and the other in Dongguan. He plans to move to Zhuhai after retiring, and keeps the other house in Dongguan as an investment.

He chose Dongguan since the city was undertaking a new round of urban construction to adapt with the integrated construction of the three cities--Guangzhou, Shenzhen and Hong Kong. His judgment was on the ball. The price of his house has already risen to over 6,000 yuan per square meter from the 4,000 yuan when he bought it. However, he has no plans to sell it because the rent, similar to Shenzhen's, is quite attractive. Like many of his peers, he has now set his sights on houses in Xi'an, capital of northwest China's Shaanxi Province, which he has just visited.

To curb mushrooming house prices and reduce the impact on its low-income residents, the Shenzhen Municipal Government has issued a series of policies, including a move to limit foreign investors from buying houses in the city and restrain banks from giving loans to prospective house buyers. The government is slated to provide more land to its citizens until 2010, and build 114,000 houses for low-rent demands. These policies forced the prices to drop by 12 percent in July.

In May this year, China's nine ministries jointly made a statement scheduled to curb property price hikes in many cities. Last month Vice Premier Zeng Peiyan detailed certain measures issued by the central government last year to cool down the red-hot real estate market. The policy states that houses of less than 90 square meters should make up 70 percent of a property project that is under way in cities, and not less than 70 percent of the provided land should go to low-rent houses, economically affordable departments and medium and small-sized ordinary commercial use flats.

Shenzhen has already met this requirement, with 75 percent of houses in each project being less than 90 square meters. However, surging prices are hard to control at present due to flourishing demands and the fact that the supply of real estate has reduced this year, according to Shenzhen Real Estate Information.

Vice Minister Qi said that the government would introduce tax and credit policies to prevent people from buying property for investment purposes.

"We will do everything we can to prevent price hikes driven by non-market factors," he said.

(Source: chinanews.com.cn, China Real Estate Business and Economic Information Daily)