The real estate roller coaster
How China’s housing market fluctuations make real estate agents rich or depressed overnight
○ Recently, a series of policies restricted the real estate markets of several major Chinese cities
○ These polices have affected the lives of agents and buyers. Customer numbers have decreased dramatically and many have left the sector
○ Over the past years, the change in real estate agents’ lives reflect the rapid changes to the housing market
When Jess Hu arrived at the residential compound, there were already a dozen people dressed in cheap black suits waiting for her.
What followed was pure chaos. The two groups of real estate agents started blocking each other, sometimes even tussling, as Hu’s agent quickly led her past the jumbled human mess to let her see the apartment first.
She decided to buy an apartment last month and said the experience was exhausting. It felt like she went through a war to win a place.
After taking a quick look around, her agent sat down to talk prices with her. At that time, the agent had to turn his phone to vibrate, because potential buyers kept sending in WeChat messages saying “I’ll add 100,000 yuan ($ 14,500),” “I’ll add 200,000.”
He told her that this frenzy had been going on for a while, that in the past few years they even went so far as installing telephone signal blockers in negotiation rooms. “It’s like walking into a well, you can’t receive any phone calls, just dead silence.”
She finally agreed to buy an old, 70- square- meter apartment for almost 5 million yuan.
But that deal soured just few weeks later. After the Beijing government released new housing regulations on March 17 to cool the market, the property she had just agreed to buy was officially not allowed to be sold, because it used to be owned by a company. Her agent, confused and frustrated, quit his job and left her to deal with the fallout.
China’s real estate market has been through dramatic changes in the past few years. It has steadily climbed and house prices have soared – even doubling and tripling in some cities. While the boom has deeply affected the lives of real estate agents and buyers, the new wave of regulations seems to have changed them once again.
Shifting winds
In the past month, more than 10 regulations on real estate have been promulgated to cool the overheated market in Beijing. One of the harshest and most influential policies came out on March 17, banning anyone from building residential housing on land planned for commercial purposes. Others include the policy that affected Hu, which banned companies from selling residential housing within three years of purchasing it.
Wang Hao ( pseudonym), a Beijingbased real estate agent, told the Global Times that he can see his clients are feeling uncertain right now, as are many agents and market observers, because nobody can figure out what the policies actually mean and where the real estate market is headed. It might take quite a while before the situation clears up, he said. “This is a sensitive time,” Wang said. “In the past, we used to have lots of
clients asking to see houses, but now we have maybe only three showings per week, and our online appointments have dropped by half,” he said.
In recent weeks, official departments have held meetings with different real estate agents and housing websites, stressing the importance of market regulation, demanding agencies apply the new restrictions to their listings, as well as removing certain phrases from advertising such as “school- district housing.”
As these strict rules took effect, real estate agents took the hit first.
An agent for the large real estate firm Lianjia said he had nothing to do this week and was forced to go on vacation. He expects his job to be near impossible for the foreseeable future.
Wang thinks most of his clients are simply biding their time right now to see if clearer and more detailed policies are released.
Different districts are interpreting the policies in different ways, which is also a source of stress and confusion for agents and buyers. Hu said last month her agent first told her the deal can still go on, because Haidian district still allows the sale of houses in that category if the deal was agreed upon before March
A real estate agent in Beijing’s Fengtai district said 2016 was his best year ever. He sold 23 houses and received 400,000 yuan in commission.
17, but later suddenly said that the rules are different in where the house is in Chaoyang district.
Then amidst this confusion, the agent quit and left her in the hands of new agents, saying that if he was involved with this sale any longer he’d come down with depression. He then proceeded to open a restaurant in a suburb.
The housing phenomenon sparked by the Xiongan New Area is a vivid example of how the real estate business can rapidly change in response to government policy shifts.
Liu Ninzhe, a reporter with the Hong Kong- based Ta Kung Wen Wei Media Group, told the Global Times she was already on the road to Xiongan at the break of dawn on April 2, less than 15 hours after the central government announced the establishment of the new city in North China’s Hebei Province.
She had a local contact, an agent by the surname of Jin. When the central government announced the establishment of the new special economic zone on the evening of April 1, Jin said on the phone excitedly, “Yes, we are still selling, it’s at 4,200 yuan per square meter, but tomorrow it might be different.”
At midnight, Jin published a video on WeChat titled “Beijingers flood to Xiongan to grab houses.”
By the time Liu was on the road to Xiongan early next morning, she received a WeChat voice message from Jin. “I told you to come last night and you didn’t! Now house prices here are changing by the minute!” he reprimanded.
On the way back to Beijing, she was still getting messages from agents. At this time, the government had already interfered and locked down most of the market. Housing prices in some parts of Xiongan had increased by over 10,000 yuan per square meter overnight but sales were now banned. Agents scrambled to find housing stock near that district and texted the information to potential buyers, racing against time. It felt like a war.
A simpler time
Wang remembers a simpler time for the Chinese real estate market. He joined the business in 2011, when Beijing had just released a harsh policy forbidding non- Beijing residents from buying housing unless they could prove they have worked in the city for five years.
When he first started, there weren’t that many buyers and he mostly dealt with longtime Beijing residents seeking residential housing. He remembers that back then many agents would go on the streets to find customers, passing out flyers and holding giant signs.
Then the market exploded, especially last year.
“Compared with the past, I’d say the world’s gone topsy- turvy,” Wang said.
A definite change is that a few years ago, an apartment was sold for average of 1 or 2 million yuan, so the commission charged by agencies was about 30,000 yuan per property. After last year’s feverish growth, prices have gone up to at least 3 or 4 million yuan per house, so commissions have more than doubled and agents’ salaries have gone up.
According to a 2016 end- of- year report by sohu. com, a real estate agent in Beijing’s southern Fengtai district said 2016 was his best year ever. He sold 23 houses in total and received 400,000 yuan in commission. House prices in his district went up 20 percent and one out of every 20 clients he showed houses to made a purchase. He also used his earnings that year to buy a house in his hometown in Hebei, where the 2016 average house price per square meter was about 4,500 yuan.
Zhang Jie ( pseudonym), another Beijing housing agent, first joined the business more than a year ago, when the market was soaring. Back then, a workday started in the early morning and ended late at night.
When he went to the office every morning, he would be bombarded with phone calls and messages demanding certain types of housing. He would usually meet three clients a day, taking them to five houses each.
A Chaoyang district resident told the Global Times she bought a house in 2014, but starting at the end of 2015, she started getting constant phone calls from her old agents, asking whether she’d like to sell or rent her apartment. Sometimes she’d get a phone call every few days, each offering a higher price than the last.
Along with this boom came a mixed reputation for real estate agents. Many need their help in the hunt for housing, some have hopes of making a profit from the market frenzy, but many also blame the agents for fuelling real estate speculation.
But all that seems somewhat distant now, and there’s nothing much the agents can do but wait.
“As a real estate agent, you can only go with the tide and get used to it,” Zhang said. After a pause, he added, “We all want affordable housing, so this is a good thing, isn’t it?”