In Hainan, China’s Hawaii, a hot property market proves hard to cool
Runaway property prices have caused the island province to introduce China’s strictest ever restrictions on non-local buyers. Will this curb the excesses of speculators adept at bending the rules? Sceptics just aren’t buying it
To his hometown friends in Sichuan province, China, Zhang Huadong sounds like a real estate salesman. His conversations always end the same way – with advice to “come and buy a flat in Hainan”.
Those friends could be forgiven for any envy the suggestion prompts. After all, “China’s Hawaii”, as this southernmost province is known, is famous not only for its subtropical climate but for its clean air – a luxury lacking in many other parts of the country.
And, as a long-time resident, Zhang has personally witnessed the potential of its property market. In the past eight years, the value of his 100 sq metre apartment in Haikou City has risen fivefold to US$385,000. “I tell my friends having a property in Hainan will be their best buy, whether as somewhere to live after retirement or for investment purposes,” Zhang says cheerily. At least four of his friends have acted on his advice, moving hundreds of miles in the process.
But people like Zhang and his friends have become a problem for the island province, which is in other respects an economic backwater. The province’s runaway property market prompted authorities on Sunday to roll out the country’s strictest-ever restrictions on home purchases. In a crackdown that will curtail the ability of Zhang’s friends to join him in paradise, the provincial government has barred non-locals from buying homes unless they can prove they have paid into the local social security fund for at least two years. In some of the province’s hotspot cities like Sanya and Haikou that requirement goes up to 60 months and in other areas non-local buyers are banned completely.
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The provincial government hopes this will go someway to addressing the relentless rises in prices that have left many locals struggling to afford homes. Property prices on the island more than doubled in the past 10 years, and were US$1,543 per sq metre in 2016, according to the Hainan Provincial Bureau of Statistics. That compares to an average salary for urban workers that is just US$812 a month.
In March, new home prices in Haikou, the capital city of Hainan, rose 2.1 per cent from the previous month – an increase surpassing any other Chinese city, Beijing and Shanghai included.