A modest basement flat in Beijing was recently bought for 10.5 million yuan (about US$1.66 million), initiating a new round of hot debates about the skyrocketing housing prices in China's capital city. Some jokingly say that they didn't know there are so many wealthy families these days until they started to see people flash millions of yuan to buy a "snail house" or micro-flat in Beijing. Others are curious to know what the astonishingly expensive basement flat looks like.





Housing prices fueled by education fever

Liu Yan (pseudonym), who has a 4-year-old son, was considering buying an apartment in downtown Beijing. She settled on a basement flat, but the opportunity slipped through her fingers as she hesitated about the price.

The 91.3-square-meter basement flat is located in the Aiminli Residential Area in Xicheng District, known as a "golden location" in Beijing. The flat was sold at 115,006 yuan per square meter on March 15.

Mr. Ding, a real estate agent working in the district, was quoted by the Tianjin Daily as saying that the 10.5-million-yuan transaction was handled by him personally.

"Considering the space and location, you wouldn't think the price is too high," said Ding, who said he couldn't remember the exact house number.

Ding explained that the buyer, a parent of a school-age child, bought the flat with a bank loan after a few rounds of negotiating with him. The price was barely reduced, but the buyer still thought it was an acceptable deal.

Ding revealed that the original owner of the basement flat was an old man, whose daughter wanted to sell it and use the money to buy a larger apartment in a cheaper district in the city, so that her father could live more comfortably in his later years.

And housing prices that high are not rare in the district. A woman of the surname Zhang similarly paid 7 million yuan for a 60-square-meter apartment, to make it easier for her child to go to a reputable local school.

In fact, education fever is fueling the skyrocketing housing prices in Beijing's Xicheng District, where a number of elite schools operate, with Beijing No.4 Middle School appearing first on the list. Today, many parents in Beijing are buying wildly expensive houses to get their children into these elite schools.

The Aiminli Residential Area, where the 10.5-million-yuan basement flat is located, is close to Xishiku Primary School, a church school built by the French more than a century ago. The school is famous for its English and French language instruction and, more importantly, its graduates can go directly to the No. 4 Middle School.

According to Mr. Ding, roughly 80 percent of the apartments in the Aiminli Residential Area have been sold to the parents with school-age children, while the other 20 percent of the households belong to aged residents who don't want to move because the nearby Peking University First Hospital is convenient for acquiring medical treatment.

Ding further explained that the "basement flat" is actually what realtors call "semi-basement flats," built 2.5 meters below street level, with two-thirds of each window above ground, so a little light can pass through.

Ding reported that one semi-basement flat in the community was sold at a "low" price of 6.5 million yuan a few months ago – the "cheapest deal" this year to date, due to the owner wanting to sell it off quickly for emergency purposes.

As of now, Ding added, all the basement flats of that type in this residential area have been sold.

Housing prices expected to climb further in the summer months

The real estate business in Beijing's Xicheng District is so active that an apartment may sell immediately after being listed on the market. Ding cited another example of a 44.3-square-meter flat in the Jingjidao Residential Area that sold for 7.52 million yuan, a cost of nearly 170,000 yuan per square meter.

Both Mr. Ding and Ms. Zhang agree that with the approach of summer, housing prices in Beijing are likely to rise even further. Mr. Ding noted that if the 10.5-million-yuan basement flat was sold a little bit later, it could be worth more than 11 million yuan.

Zou Linhua, a researcher at the National Academy of Economic Strategy of the Chinese Academy of Social Sciences, said that Beijing's housing market is not promising, but the actual trends remain to be seen.

Meanwhile, housing prices in Yanjiao, in Beijing's neighboring Hebei province, have also picked up, witnessing a month-on-month increase of 3.49 percent.

As for Liu Yan, she regretted missing an opportunity through her indecision. Having worked in Beijing for six years, Liu and her husband and son still live in a small rented apartment. To buy a small apartment in Xicheng District, the couple have decided they will sell their four-room apartment in their hometown so they can afford a down payment in Beijing.