China Housing Prices: Real estate market weakens in resource-depleted cities

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While housing prices in China's mega cities like Beijing and Shanghai remain sky-high, a small city in the nation's northeast province Heilongjiang has suddenly become famous for its extraordinarily cheap apartments. Is it a signal that China's housing market is cooling? CGTN's Feng Yilei has more.

Hegang, a little-known city in China's Northeast, has earned an overnight reputation on social media for its low home prices. A 50-square-meter flat costs an estimated 20 thousand yuan, less than 3,000 US dollars. Fan Huixue is one of those selling his property at such a bargain price.

FAN HUIXUE, PROPERTY OWNER JIUZHOUSONGHE HOUSING ESTATE "I got two apartments after my old hut was demolished. One of them is now vacant. I'd rather sell it soon to pay for my children's tuition than spend more on decorating it."

Since the city rolled out renovations of its shantytowns, many like Fan have been relocated to new flats. Some with more than one house tend to sell the unwanted ones at mere market prices.

ZHOU ZHIGANG, DEPUTY DIRECTOR HEGANG AFFORDABLE HOUSING SERVICE CENTER "The relocation project enables residents to move into new apartments at almost no cost. A great many of these affordable homes somewhat reduce the demand and price of commercial residential housing."

At a local housing agency, most houses for sale cost over 2,000 yuan per square meter, that's about 300 US dollars – much more than the anecdotal low price. Though it seems that extremely cheap homes are exceptional cases, the average housing price here in Hegang is still rather low.

FENG YILEI HEGANG, HEILONGJIANG PROVINCE "In Hegang, it's quite common to find a 50-square-meter apartment worth about 15 thousand US dollars. But with that money, you can hardly buy even one square meter in downtown Beijing."

And locals have also seen a gradual cooling of Hegang's housing market.

WANG DELONG, REALTOR AIXINJIA HOUSING AGENCY "In recent years, property trading volume has been declining. Housing prices used to be stable but have dropped this year. I think a dwindling population has led to falling demand and price."

Experts say Hegang is a microcosm of northeastern China's rustbelt, which now faces a dual problem of obsolete industry and resource depletion. After its longtime coal-mining sector became sluggish, Hegang lost its luster, leading to an outflow of talent, a decrease in consumption, and downward housing prices.

LIU LEI, DIRECTOR HEGANG DEVELOPMENT AND REFORM COMMISSION "I believe a transformation of our city will boost the real estate sector. Building industrial clusters of coal, graphite, cultural tourism and pollution-free food will attract more people to Hegang and increase demand for living and working space."

While home prices in nearly ALL 70 major Chinese cities edged up two years after Beijing's restrictive policy to curb overheated housing markets, cities like Hegang are looking to end the plunging trend – a sign of their long-awaited urban renewal. Feng Yilei, CGTN, Hegang, Heilongjiang Province.