Yes, that is right. Housing surrounding top competitive elementary schools are generally very expensive.
"Xuequfang" or school district based housing is a term that people both love and hate. These houses are often small, overpriced and sometimes rundown apartments in the vicinity of these top competitive elementary schools. In most China cities including Beijing, the common practice for elementary school enrollment is the Nearby Enrollment Policy of Compulsory Education in China. This means that students are “to be enrolled into a school nearest to your house”. Thus, it is clearly divided into which schools a child can be enrolled in based on the streets or areas that he or she lives in.
This enrollment is based on registered addresses, which means parents must own property near competitive schools in hope that their child will be admitted. Rental of properties are not eligible for this enrollment policy.
It is an indisputable reality when it comes to the good and bad effects of school districts on housing prices. The most extreme example is the huge difference in housing prices between residential districts in Xicheng and Haidian which are adjacent to each other. Even though the two districts are separated by a street, the price per square meter can differ by about 50,000 yuan or more.
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Though Yuzhong Elementary School in Xicheng district and National Elementary School in Haidian district are barely one kilometer apart, the housing prices per square meter in residential areas opposite the two schools differ by 50,000 yuan. According to our analysis of residential website Fang.com’s April 2017 data, its secondhand housing transactions data show that the average price per square meter for houses in residential estate Yuzhongxili which is close by to Yuzhong Elementary School is 146,000 yuan. Just a kilometer away, housing prices in residential district Madian West Rose Garden - in close proximity to National Elementary School - are about 96,000 yuan. Yuzhong Elementary School is situated in Beijing’s “Niuxiao” or Beijing’s most prestigious elementary school cluster concentrated within the Desheng school district.
Xicheng district is known as “high ground” in Beijing’s public education, so housing prices should definitely be higher than other residential districts. However, will the differences in housing prices be smaller within the same administrative area?
The answer is no.
There are different school districts within Beijing’s Haidian residential district. Just as there is disparity in enrolling into elementary and middle schools in that area, the differences in housing prices within that area are also very huge. For instance, Shangdi school district and Qinghe school district lie on opposite sides of Shangdi station on the number 13 metro line. This resulted in housing prices for nearby residential districts Shangdidongli and Yimeijiayuan corresponding to these school districts to greatly differ. For housing located near Shangdi Experimental Elementary School and also known as one of the most prestigious elementary schools among parents, the average price per square meter is 119,000 yuan according to April figures from Fang.com. As for Haidian No. 2 Experimental Elementary School (Modern Campus) located in the Qinghe school district, average price per square meter for housing in Yimeijiayuan is 76,000 yuan.
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How do you explain such big differences in housing prices between neighboring regions?
Pursuing probabilities that are all linked together
Parents are pursuing nothing more than probabilities that are all linked together. When their child enrolls into an elementary school in a prestigious school district based on the Nearby Enrollment Policy, the probability of entering a prestigious junior high school is much higher than those students from general school districts. Moreover, their child can get to enjoy high quality education resources and there is an even greater chance of entering a good high school. Finally, the possibility of getting into top universities such as Peking University and Tsinghua University will be even greater.
Take a parent purchasing a property at residential district Yangguangmeijing in Xicheng as an example. This parent wants his or her child to have a chance to enter Beijing’s top school district - Desheng school district. Thus, the parent will purchase a Xuequfang or property within the Desheng school district, and this can be at an extravagant cost of 20 million yuan. Just opposite this residential district is Yuxiang Elementary School, one of the most prestigious elementary schools. In the “high ground” of education or Xicheng district, the average residential prices per square meter in over 70 percent of residential districts or communities exceeds 100,000 yuan.
But what is the probability of a child eventually getting into university? Will this differ greatly when compared to other average or general school districts?
Apart from high quality elementary schools, an elementary school student wanting to apply to good middle schools must also follow the same Nearby Enrollment Policy. This then again encourages parents to purchase residential housing in prestigious school districts, and prices for Xuequfang will continually increase. There are eight middle schools clustered within the Desheng school district. With the exception of two middle schools, the rest of the middle schools are listed in the 2017 Beijing Education Examination Board’s prestigious high school affiliated middle schools.
To distribute more equity in educational resources in recent years, Beijing implemented the school placement allocation system based on the Nearby Enrollment Policy. Instead of simply registering a student to an elementary school, this system makes students enroll to a group of schools. Allocation of school placements may depend on a lottery drawn by a computer.
This policy forces parents to purchase properties located within school districts that contain more prestigious elementary schools.
Prestige is what parents are most concerned about. As long as their child can be enrolled or admitted into mostly prestigious middle school districts, this means that their child will have more opportunities to enter a prestigious middle school, and then eventually get closer to being admitted to exemplary high schools.
In 2017, exemplary high schools in Xicheng district planned to accept 4,735 students. In reality, the number of students taking the high school entrance examination from Xicheng district is at 66 percent. As for Dongcheng and Haidian, the numbers are at 56 and 33 percent respectively. In Beijing’s main city districts, the probability of students from Xicheng district being admitted to prestigious or exemplary high schools is the highest.
This also means that for those families that have purchased properties surrounding Desheng school district, the possibility of students coming from Xicheng residential district entering exemplary high schools in Xicheng district is more than 60 percent while students from neighboring Haidian district have only a 30 percent chance of entering.
More importantly, in Haidian district where the number of high school examination applicants are more than two times that of Xicheng district, there are only 11 exemplary high schools as compared to 15 exemplary high schools in Xicheng district.
One parent who was once in a dilemma to purchase property in either Haidian or Xicheng told us, “ As for Haidian district, the students are many, and parents are driven mad with all the extra classes that students have to take after school. On the other hand, parents are a bit more relaxed in Xicheng district. There are many prestigious middle and high schools concentrated in this district - the number of places are much more, and the number of students are lesser. As there are more exemplary high schools in Xicheng district, parents are scrambling to buy Xuequfang in Xicheng like a flock of ducks.”
Parents care a lot about exemplary high schools as the “gaokao” or National Higher Education Entrance Examination results of exemplary high schools are far more excellent than those of normal high schools. Looking at the 2016 “gaokao” results of all exemplary high schools from Dongcheng, Xicheng and Haidian districts, six of the top 10 schools come from Xicheng district for scores in humanities and science. Looking at the admissions rate of first-tier universities, the admissions rate is 100 percent for six to seven exemplary high schools from Dongcheng district. On the other hand, the admissions rate is about 30 percent for high schools in Xicheng and Haidian districts. From publicly available admissions rates of exemplary high schools in Haidian district, the total admissions rate from all these high schools in the district hit 90 percent.
Xuequfang - an asset for investment or speculation?
Besides a Xuequfang being a crucial part of school districts, it is still a house that is not only as a living necessity, but also as an investment that many people aim for.
Based on the average secondhand housing transaction prices of corresponding residential estates near school districts, the largest increase in prices can be seen in residential estate Jingshan of the Dongcheng district. Located near Donghuamen school district, the average price per square meter for Jingshan in March this year is 8.7 times that of the average price in March 2015. As for residential estate Andingmen located near Jiaodaokou school district, the housing prices have increased by more than four fold. In Xicheng district, the highest increase in housing prices is in the Zhanlanlu school district where the average price per square meter has soared by 3.5 times that of the average price in March 2015.
To be in possession of a Xuequfang in one of Beijing’s three districts (Dongcheng, Xicheng and Haidian), it is definitely to increase the chances of enrolling into numerous outstanding middle and high schools. However, these probabilities are not 100 percent guaranteed, and the value of houses will continue to appreciate regardless of whether they are new or old.
Several parents believe that the correct way of using Xuequfang or school district based housing is this: “It does not matter if the house is big or small, or what the environment of the surroundings is like. Once the child graduates from this school district, the house can be sold off.” Parents know that as long as the disparity in the quality of educational instruction in different school districts does not change, the demand for Xuequfang will always remain.
Along with rising income and appreciating family wealth, parents want to pursue even higher levels of quality education for their children. Thus, this can no doubt lead to a chance of moving further up the social class hierarchy. However, with the shortage and unbalanced distribution of quality education resources across different regions of the city, the struggle to obtain housing surrounding outstanding elementary and middle schools will remain the main issue.
As of now, the value of a Xuequfang has exceeded other residential property values and has exceeded other social class labels. It is becoming a bargaining chip for asset speculation. In China’s big cities especially, several of them are undergoing large asset bubbles in the market. The real estate market has become the biggest bubble, and the shiniest of them all is the Xuequfang in this big bubble “bath”, causing a mass exodus of young people being priced out of the country’s big cities.
Not only is Xuequfang is an area of concern for current city residents, but it is also an important indication for new immigrants wanting to assimilate into the city. For new immigrants moving to big cities such as Beijing, Shanghai and Shenzhen, purchasing a Xuequfang is not only the best way to secure social class status, but it is more of a quick way to appreciate family wealth.
With regards to speculation of housing surrounding school districts, what kind of problems will it have for China undergoing a transition period in its economy? Will this widen the income gap further or will it encourage social integration? With the rise of the increasing middle class in China, will this lead to happiness? To what extent will Xuequfang become a solidifying indication of social class in China? This is an issue that people in China should deeply reflect about.
Reporting and graphics by Jiachuan Wu* and Spe Chen*
Translated by Jiachuan Wu* and Christine Low*
Edits by Christine Low*
Visual Design by Jiaxin Zhang
Web Development by Spe Chen*, Jiachuan Wu*, Dongke Jiang* and Linlin Nie
Data provided by Yu Liu (Tencent Real Estate Channel), Yunfang Data and Beijing Xuequfang Observer
Produced by Zhimin Huang* and Chuanju Wei
With production assistance from Yi Hua Zhang
*Members from Data Works