As in most parts of the United States, property values in China are linked directly to the quality of education offered nearby. And as China's one-child policy eases, property values and taxes are getting a boost, too.
Property prices in areas that have the most popular schools are driven up by parents as they relocate because public primary schools in many Chinese cities have to admit children who live locally. And after China eased up its one-child policy last month, the trend is set to accelerate with an oncoming baby boom.
In October this year, prices for pre-owned homes and apartments in Beijing rose 19% compared to last year. According to Li Hui and Ben Blanchard of Reuters, the spike is far greater in the areas young families covet – neighborhoods near the best schools, which are often clustered in the older parts of Beijing instead of near sprawling new apartment complexes. HomeLink, a Chinese real estate agency and consultancy said that pre-owned homes close to good schools are 50 percent more expensive than similar ones in comparable areas on average and the gap has widened over the past year.
Additionally, in November 2013, China began to allow couples to have two children if one of the parents was an only child, a measure demographers say will apply to tens of millions of families.
"The new policy will widen the supply-demand gap for school-area houses in the next three to five years," said Zhang Quanguo, an analyst with HomeLink. "Prices will go even higher."
Enormous emphasis is put on education by Chinese families. Preceding a prestigious university is a good high school education predicated on an excellent primary school foundation.
"Education is very competitive," said a parent surnamed Wang, the father of a two-year old boy.
"We don't have the connections to get him into a good school, so we can only buy a school-area home," added Wang.
The government has for years required public primary schools to admit students from local neighborhoods in many cities in an effort to give families fair access to education. With selected key schools getting more funding as well as better facilities and teachers, a nationwide system for ranking schools according to academic results has led to significant disparities. In fact, the quality of education varies greatly between the top primary schools and the rest according to experts.
"This is social inequality, public schools use government resources and funding, but most people can't afford to buy a school-area home," said Tan Fang, a professor at the South China Normal University in southern Guangzhou city.