Existing Home Sales Weak in Beijing; Using Your Parents' Life Savings for a Downpayment

South China Morning Post has a trio of good articles on housing.

Secondary market transactions diverge, says survey

Transactions in existing homes in Beijing fell to the lowest volume for March since 2009. As more buyers moved to the sidelines, the average secondary home price in the city dipped 0.11 per cent for the fourth consecutive month, to 42,392 yuan (HK$53,264) per square metre.

The average price rose 14.7 per cent year on year, less than February's gain of 17.5 per cent.

Shanghai's secondary home market showed more signs of stabilisation last month.

Volume leads price, but these markets are still holding up well. In 2011, real estate rage was in Shanghai and price cuts were seen there and in Beijing. Regulators chased the developers and excessive speculation out of Beijing and Shanghai. They flowed into smaller cities, which is the center of trouble in 2014.

Young homebuyers in China can't be too proud to accept parents' help

I came across quite a few such families in Beijing. Among my neighbours were retirees who lived with their son and took care of their grandson. The elderly couple had sold their home in Shenyang to help make the down payment.

Developers may welcome such young homebuyers, but the government needs to be concerned, especially when there are growing worries about a widening pension fund deficit as the population ages rapidly.

A guy I knew in the mid-2000s told me he earned more in 1 year than his father saved in his entire life. He worked for a multinational tech company and was earning a middle class salary at the time. A 60-year old parent in 2004 was 30 in 1974 and 50 in 1994. Now 10 years later, a similar parent may have save a lot more. Still, if the parents have enough money to help a child, it is very likely coming from a home sale or a mortgage on the parents' home. Many people did receive "free homes" as part of state-owned reforms in the 1980s. The companies laid off workers, but let them take ownership of their company provided housing. Once the real estate boom hit, this became the largest asset by far for many families.

Developers offer buyers financing to get around banks’ loan-to-value curbs

Hong Kong's biggest developers are skirting around bank restrictions by offering loans to raise the mortgage ceiling up to 85 per cent of a flat's value - which could put buyers at risk of a default if home prices fall significantly.

To speed up sales of large units, developers are providing an array of financial schemes as banks reduce the maximum loan-to-value (LTV) ratio for high-priced homes.

"A higher loan-to-valuation ratio will definitely mean higher risk," said Ivy Wong Mei-fung, Centaline Mortgage Broker's managing director.

Developers are doing similar things in China, along with several other sales tactics. See: The Giveaways Begin Again: Free Coach Bag If You Have ￥300,000 in Assets; Low Down Payments