From FT Alphaville, more information about price changes in Chinese property in 2009. One chart depicts a three month moving average, demonstrating the speed of 2009’s price increases; and another that breaks it down by city. Price increases have been heavily concentrated in coastal cities (200% increase in Shanghai, 400% in Guangzhou). According to CRIC’s data, Wuhan’s housing prices fell during 2009. I recall some stories about real estate agents in Wuhan offering 50% discounts at the end of 2008, something that seems unimaginable given the long waiting lines that appear whenever new property goes on sale in Shanghai.

One of the counter arguments to the notion that China has a rapidly growing property bubble: a majority of the country’s 1.3bn people wants to move to the coastal cities (which account for about 5% of the total national population), and therefore use of averages (for example, years of average income required to purchase a flat in the city) that are appropriate in other contexts lead to skewed results. Examining only the top 5% of Chinese earners, for example, Shanghai land prices might not seem that outlandish. Anecdotally, this seems at least partially true: it’s difficult to describe the magnetic pull that the eastern metropolitan areas exhibit, despite their increasing unaffordability for most mainlanders.

Among mainland youth, I’ve not come across a single example of someone that did not have their heart set on going to one of the three major cities (Beijing, Shanghai, Shenzhen). This seems crazy given the living expenses that one has to deal with, along with (presumably) more competition for the career-track jobs that would make resettlement worthwhile. Surely the positive network effects of agglomeration cannot be worth the headache of dealing with high house prices and xenophobic city-dwellers, and upon first glance this slavish devotion to migrating east seems like another entry in the long list of mainlandgroupthink.

Puzzling until the actual extent of wage differentials became clear: GDP/capita in the large cities is around USD11,000, with second-tier cities about 50-70% of that. Within the U.S., metropolitan wage premiums are hardly so significant (potentially aside from Washington D.C., which sticks out like the governing municipality of a banana republic when examining US income data depending on how you slice it). I haven’t been able to find good information for the distribution via age/education levels, though anecdotally it seems to hold across the distribution.