Another factor that's contributing greatly to soaring house prices is: good school districts. In order to send their kids to good schools, parents aren't shy about shelling out millions of yuan buying a tiny home in downtown Beijing.
An article recently caused a huge stir online by reporting that a smalll apartment in a downtown Beijing Hutong was sold for 460 thousand yuan, or over 70 thousand US dollars per square meter because it's in a good school district.
A 400-meter-long Hutong, in the heart of old Beijing, sought after by parents because of the top elementary school nearby. Most of these homes are more than 100 years old and many don't even have bathrooms.
"We didn't live here. It was not until our kid started school that we came back."
Our reporter found the place which was causing all the excitement on the Internet but was the report accurate?
"We've been living here ourselves for decades."
This resident told us nobody had ever sold this apartment. We later searched the database of a major real-estate brokerage company -- and also the government's database -- no transaction has been recorded.
Fake news but not without any true implications. A middleman guided us to an authentic one 13-square-meters for 4.8 million yuan, or more than 730 thousand US dollars and it's barely habitable.
Wang Pang is an engineer at the Tsinghua Tongheng Urban Planning and Design Institute. His team has been studying school district house prices and policies for two years.
"City-level key elementary schools cover about 283 neighborhoods, which account for 3.24 percent of the total a very low ratio," said Wang Pang.
And schooling is not the only purpose many buy such houses for investment purposes, but insiders believe this strategy is not without risks.
Wang Xuefeng has worked in the brokerage business for seven years. In 2014, when three elementary schools were merged, and more houses became eligible for the key school, prices in that area collapsed.
"After the merger, between April and June 2015, the same house type in the same neighborhood the price went down about 5,000 yuan per square-meter."
China's education ministry has also moved to open key schools to more neighborhoods, to improve the quality of education. It's hoped that competition to get into high-quality schools won't come down to where one lives.
