"Housing slave" is a new buzzword translated from fangnu in Chinese pinyin. People in this category can barely maintain a decent standard of living although they may have big apartments in downtown urban areas.

    Vivian Huang, a 27-year-old administrative personnel in a multinational company in Shanghai, pays 2,842 yuan (US$355) in monthly repayment for her 30-year mortgage.

    "I have to think more than ever before I change jobs, travel or even go shopping after work," said Huang who borrowed 500,000 yuan from a local bank to buy an apartment worth 720,000 yuan in the city.

    "I am more sensitive to the news of interest rates rises and can't imagine if I lose my job or fall ill," said Huang whose monthly pre-tax salary is 5,000 yuan.

    Like Huang, many other Chinese find that buying an apartment does not necessarily mean the start of a better life.

    Monthly salary

    Almost one-third of the mortgage borrowers pay off the monthly repayments using more than half of their monthly salary, according to a recent survey of 15,014 respondents nationwide by Sina.com.cn, one of China's most visited Websites.

    It is internationally accepted to use one-third of the monthly salary to finance a mortgage.

    Meanwhile, the China Banking Regulatory Commission, the regulator, stressed that lenders should control the ratio of borrower's mortgage to the salary each month below 50 percent and the monthly liabilities, including mortgage loan, should be less than 55 percent of the total revenue.

    However, in order to boost mortgage loans, which boast the lowest non-performing loan ratio among all types of loans, domestic banks have been easing their loan application approval.

    An applicant with a 4,000 yuan monthly salary can easily provide a 8,000 yuan per month salary certificate to a bank to apply for mortgage loans.

    Increasing reliance on mortgage loans has elevated risks of bad performing loans for lenders, said industry officials.

    Shen Xiaoming, a CBRC official, warned last month that China has entered the stage of risk exposure in the individual home mortgage loan sector due to fluctuation in housing prices.

    He said the ratio of nonperforming home mortgages has risen to 1.5 percent at the end of last year from less than 0.5 percent in 2001.

    Wu Xiaoling, the deputy governor of the People's Bank of China, the central bank, said recently that mortgage loans have become the main debt for Chinese people, and therefore have a direct impact on their other consumption.

    Since China has commercialized housing allocation instead of distributing homes as a form of welfare nine years ago, millions of households have purchased houses financed by a combination of personal savings and mortgages.

    Rising prices

    However, escalating housing prices in the past three years have made people's savings hardly enough to pay the downpayment and they are relying more on mortgage loans than ever.

    The central bank's data show that more than 70 percent of domestic home buyers have to borrow to finance their purchases.

    Individual mortgages offered by domestic commercial lenders topped 1.84 trillion yuan at the end of last year, more than 35 times the 51.4 billion yuan in 1998, according to the central bank.

    While the class of fangnu complain about the overly high housing prices, some developers suggest customers need to change their attitude towards owning a property.

    It is deeply rooted in Chinese traditional thinking that married people have to live in their own house.

    "It's unrealistic for everybody to own an apartment," said Feng Lun, chairman of Vantone Real Estate Co, a Beijing-based developer.

    "So many young couples live in rented apartments in developed countries. So why are Chinese young people so keen to buy something that they can't afford at an early age?" he asked.

    Feng's remark is echoed by Ren Zhiqiang, another developer who insisted that housing supply in China only targets the middle and high income class. Low income families should consider budget homes or renting first.

    (Source: Shanghai Daily)