RENEE MONTAGNE, host:
China's booming economy is due in part to its soaring property values, which economists say make up a third of GDP. In Shanghai, property prices have risen 300 percent in three years, pricing many out of the market. The government is trying to cool the sizzling market and not everyone is happy with its moves.
NPR's Louisa Lim's been touring both ends of China's property market.
Ms. KAREN HA(ph) (Real Estate Agent): It's linked, semi-linked. It's small, only for three or four people.
LOUISA LIM reporting:
I'm being taken around a most luxurious villa just outside Shanghai by saleswoman Karen Ha. High-end housing projects are mushrooming here because they're so profitable for developers.
Ms. HA: This is the biggest villas in China, and then price is the most expensive in China, I think now.
LIM: And this particularly estate is certainly out of the ordinary. That doesn't seem to be putting off buyers. Ten villas have sold at an average price of $463 per square foot. Once inside, it's easy to see why they're so pricey.
Ms. HA: Go to the basement first.
LIM: Wow. So we're just coming out of the basement and there's another private swimming pool here. And this private swimming pool has actually got a flat screen TV on one wall so you can watch TV while you swim.
Ms. HA: Yeah.
(Soundbite of film Titanic)
LIM: The film Titanic is playing here, as it is in the private theater beside the pool. This house is incredibly extravagant, with its two Jacuzzis and a sauna, and washbasins with 24-carat gold trim. It, however, could be one of the last of its type. The central government's forbidden the release of any more land for luxury villas, instead ordering cities to allocate most of their land for small flats. It's an attempt to cool runaway property prices, an aim supported even by saleswoman Kang Ha.
Ms. HA: This is a waste land, you know, 4,000 square meters for just one family. It's - this land, you can take the apartment - many people can live. You know what I mean?
LIM: It's not the government's first attempt at bringing down soaring property prices. Last May, it introduced measures to thwart speculators, including a sales tax. The result: an immediate drop in property prices. That act had victims, including Annie Xia and Sam Hu.
Ms. ANNIE XIA: (Foreign language spoken)
Mr. SAM HU: (Foreign Language spoken)
LIM: They just bought an apartment which suddenly lost a third of its value. It's regained some of that, but they're still facing hefty monthly payments on a flat that's lost equity. And Annie says she and Sam have joined the ranks of a new class of Chinese, the mortgage slave.
Ms. XIA: Some of them our friends and colleagues, and even our relatives, they think that we are mortgage slaves because they think that we have to pay so much money every month. Now we are short of money. It's a very terrible period for us now.
(Soundbite of a television program)
LIM: They watch television at home, their leisure activities curtailed by their financial squeeze. And they're not alone. An official survey found the average Shanghai household spends 42 percent of its income on a mortgage. The pair aren't happy about the government's measures to cool the market.
Ms. XIA: Anyway, I don't think it's a good idea, because I mean the price should be decided by the market itself.
Mr. HU: The people are forced to...
Ms. XIA: Earn more money.
Mr. HU: Yeah, earn more money. Yeah. Otherwise, we - it's trouble for us.
LIM: Public dissatisfaction is rising as more and more people are priced out of the market, and interest rate hikes mean homeowners are struggling to pay their mortgages. And one man is trying to channel that anger.
Mr. ZOU TAO (Businessman and Consumer Advocate): (Foreign language spoken)
LIM: He's Zou Tao, a businessman and consumer advocate in the southern city of Shenzhen. He started an online campaign encouraging people to stop buying flats for three years in a bid to bring property prices down. He told me why.
Mr. ZOU: (Through translator) The market is artificially high. A lot of unscrupulous developers, middle-men and speculators have got together to push prices up. Normal people's resentment and hatred and resentment is growing.
LIM: He says he's collected 200,000 signatures for his campaign. But he's also attracted official attention. He was barred from leaving the country and he says his company was forced to close. When we meet, he acts nervously, saying his movements are monitored. But he believes the local government is scared of him.
Mr. ZOU: (Through Translator) Local governments sell land at high prices, then depend on the tax revenue from land use for financing their costs and GDP growth. So my boycott goes against their interests and could even affect the careers of local officials, so they want to stamp me out.
LIM: Certainly there's plenty for China's leaders to worry about. As property markets spiral ever higher, the danger of a bubble increases. And a property crash could explode the mirage of China's rapid economic rise. The government's intervention shows that housing has become a political as well as economic problem. It's telling that in today's China, economic issues are driving political activism.
Louisa Lim, NPR News, Shanghai.
MONTAGNE: And you can learn more about the steps the Chinese government is taking to cool China's real estate market, plus hear more stories on China's economic boom at npr.org. Our series continues tomorrow with the growing role of successful businessmen in local politics.
Unidentified Man: (Through Translator) In the past, it was glorious to be poor. It was revolutionary. Then the Communist Party trusts its poor people. Now, since economic reforms began, it's different.
MONTAGNE: Tomorrow, will Chinese businessmen democratize local politics, or will they be co-opted by the Communist Party?