Exhaustion of coal, population exodus result in lowest home prices among Chinese cities

By Li Qiao Source:Global Times Published: 2019/5/12 18:53:39

The shantytown of Hegang, Northeast China's Heilongjiang Province, is being rebuilt. Photo: VCG

"My colleagues and I thought the news was really funny," Tian Lin (pseudonym), a 55-year-old Hegang native, told the Global Times, commenting on the news that housing prices in Hegang, a declining city in Northeast China's Heilongjiang Province, were as low as 300 yuan ($44) per square meter. 

The news sparked concern and discussions about resource-exhausted cities, which are facing difficulties in industrial transformation and population outflow.

"The bargain-basement home prices are special cases of units built in shanty towns, which locals are reluctant to buy and live in because of its distance from the city center," she said. 

The normal commercial residential home price in Nanshan district, where Tian lives, is 2,000 yuan per square meter, and home prices in the city center can go up to 3,000 yuan per square meter. 

Nonethelss, housing prices in Hegang are falling and are much cheaper than other cities in China, Tian said. Hegang ranked last among 341 cities included in house pricing statistics, with an average of 2,177 yuan per square meter, according to China Real Estate Association in March. 

Depletion and outflow

The reason behind the drop in housing prices is its lagging local economic development. Hegang is well known for its coal industry, which has a history of a hundred years. 

It had up to 2.6 billion tons of geological reserves of coal, one of the country's four major coal mines, and was an important source of high-quality thermal and chemical coal in China, according to China News Service in April. 

However, Hegang was on the list of the third batch of resource-exhausted cities released by the National Development and Reform Commission, Ministry of Natural Resources, and Ministry of Finance in 2011. About 30 coal mines were closed in 2018. 

Hegang's secondary industry made up 10 percentage points less of its economy in 2017 than 10 years ago. In the same year, of the 13 prefecture-level cities in Heilongjiang Province, Hegang ranked third from bottom in terms of GDP, The Beijing News reported in May.

Zhao Kongquan, 32, from Hegang, runs a barbecued meat restaurant in Southwest China's Sichuan Province.

Zhao told the Global Times that he came to Sichuan for a job with a decent income, as there are less work opportunities in Hegang. More and more young people are leaving Hegang for better opportunities. 

The registered population of Hegang has been in negative growth for 16 consecutive years. According to the statistical yearbook of Heilongjiang Province, the registered population in Hegang went down from 1,112,600 in 2001 to 1,009,500 in 2017. 

Shantytown renovation

The low price of housing in Hegang is also due to the excessive supply caused by renovation of shanty areas in the past few years, which has led to a large number of houses in the suburbs, Zhang Dawei, the chief analyst of Centaline Property told The Beijing News. 

Hegang has launched projects to transform coal mining shantytowns, mining subsidence areas, urban shantytowns and villages in the city since 2008, according to the Hegang government in January 2018. 

A total of 97,000 households have been demolished, with 93,000 households resettled and subsidized since 2008, achieving a basic balance between supply and demand, Zhou Zhigang, deputy director of Hegang Affordable Housing Service Center, told the Guangzhou-based newspaper New Express Daily.

However, resettled houses built in shantytowns are not allowed to be bought or sold for five years. Many houses bought and sold privately are not licensed for property rights. 

Sellers can only sign agreements with buyers, which is another reason for the emergence of low-priced houses, Zhou said. 

Yin Zhongli, research fellow of Institute of Finance and Banking under the Chinese Academy of Social Science, told The Beijing News that there are signs of a general dislocation in government affordable housing resettlement. 

The population is concentrated in large- and medium-sized cities, and the transformation of shantytowns is mainly carried out in small- and medium-sized cities. 

Instead of adjusting urban planning, the policy-making organs of the cities with serious population outflows have continuously increased the scale of urban development resulting in the oversupply of housing.

New development

Hegang has been exploring methods to bring about urban transformation for many years. In recent years, Hegang has successively closed local small coal mines, integrated coal resources, and accelerated the cultivation of alternative industries, one of which is graphene. 

In recent years, the local government has made plans to develop five industrial chains, including new energy materials and graphene materials, and to promote the expansion of graphene powder into new application fields, such as battery cathode materials, Liu Lei, director of the Hegang Development and Reform Commission told the Xinhua News Agency.

Through the implementation of housing subsidies, healthcare and other preferential policies in 2017, Hegang has attracted hundreds of master's degree students, outstanding and high-level talents at home and abroad back to work in Hegang, according to the China News Service.

"I am confident in the future of my city. The Environment has been getting better and better these years, with less coal mines and more trees. My life is more comfortable," Tian told the Global Times.

Newspaper headline: Housing concerns


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