Couples often waited years for an apartment. With the advent of a market economy, the government began urging city-dwellers to buy their own homes, but few could afford to do so. Now, however, the market is seeing the effect of incentives introduced over the past two years. Young Shanghai residents already say they don't share their parents' reluctance to borrow money for a home. Home buying will be a boon for China's economy, which has been suffering from weak consumer demand.
New homeowners are usually also in the market for furniture, fixtures and d cor.
Here it will be that much bigger. It will also be a boon to China's banks, which are desperately seeking profitable alternatives to their traditional state-sector clients. Shanghai financiers, eager to cash in, are prodding the government to widen the market by authorizing sale of mortgage-backed securities. The city government is considering creating an agency to securitize mortgages modelled on Fannie Mae in the U.S., says Zhang Hongming, deputy director of the Shanghai Academy of Social Science's Real Estate Institute. But the impact of home privatization doesn't end with the economy.