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More buyers of pre-owned houses are choosing to pay in a one-off lump payment. The practice has increased since the government began control policies to curb real estate market. As our reporter finds out, those who choose a mortgage now face the heavy burden of monthly repayments.
A report by Homelink and Everbright Bank looks at Beijing's pre-owned housing market from January 2007 to August 2010. It shows that before the government's control policies in April 2010, 48 percent of house purchases were made with mortgages. Afterwards, mortgages dropped to 31 percent. The proportion of buyers choosing to use a one-off lump payment rose from 39 percent to 60 percent, the highest since January 2007.
The report also reveals the average age of first home buyers is only 27, far younger than in developed countries. In Japan and Germany, the average age is 42, while the average homebuyer in the U.S. is over the age of 30.
Experts pointed out that as young people are buying houses, housing demand and prices are less likely to fall.
Shen Jianbao, Vice President of Everbright Bank said "Younger people are buying houses. Not only are they buying, but they have their whole families supporting them."
The report says more focus should be placed on the heavy burden of repayments to mortgagors. Average monthly repayments are above 9,000 yuan - far exceeding the financial capacity of most first home buyers.