An Escape from High Housing Costs

IMG_0043_compressed

These apartments cost…how much?

Is it possible for Beijingers to cut commute times AND housing costs – by moving further away?

Millions of newcomers have flocked to Beijing in search of opportunity as the government struggles to keep up with the housing demand.  Following the age-old Intro to Econ adage, the limited supply/high demand combination has resulted in astronomically high rents within the city and Beijing now holds the unfortunate title of Most Expensive City for Housing in the world.  With an unenviable price-to-wage ratio of 34.28, meaning that it would require 34.28 years of an average worker’s entire salary (~ $10,200 USD) to buy an average apartment in the city, Beijingers routinely take on staggering amounts of debt to purchase even the tiniest of units.  (For comparison, Portland’s price to income ratio as of June 2013 was just 4.81.)

Moving to the edge of Beijing’s sprawl offers just slightly more affordable prices but comes with a price of its own.  In a city with the worst average morning commute time in the world (52 minutes), the hundreds of thousands of drivers living at the outer ring roads find themselves car dependent and even more susceptible to massive traffic jams.

It gives a worker a lousy choice: accrue crippling lifelong debt to live in a pocket-sized apartment in the city or waste years of life in traffic for something only slightly more affordable in the outer suburbs.   The high-speed rail (HSR) system can provide another option, however.

beijing traffic

Residents living at the outer ring roads face average morning commute times of over an hour.

China has the best HSR network in the world. Thought it is 75 miles away, the city of Tianjin is an easy and reliable half-hour trip by the Beijing-Tianjin Intercity Railway (京津城际铁路).  With both Tianjin and Beijing’s  HSR terminals being directly connected to their respective subway systems, a worker living in Tianjin could commute to work in Beijing in less time than a Beijinger living at the outer ring roads could.

This quick access means that satellite cities like Tianjin are actually reasonable housing destinations for workers.  At 110 RMB ($18 USD)/round trip ticket, a worker would spend 28,710 RMB (~$4,700 USD).  This commute cost is dwarfed by the difference in housing prices between the two cities, however.  An average 100 sq m family-sized unit in inner Tianjin costs only 2,000,000 RMB (~ $327,000 USD) compared to 2,740,600 RMB (~$448,000 USD) for the same sized unit in the outer suburbs of Beijing.  A worker could make the Tianjin-Beijing commute for 25 years before breaking even, and that is without factoring in a Beijing suburbanite’s costs to own, operate, and fuel a private vehicle.

Map Tianjin-Beijing

Map: Tianjin in relation to Beijing

Tianjin-Beijing Rail line

It only takes 30 minutes to travel 75 miles on Beijing-Tianjin Intercity Railway route, with trains that travel over 215 mph.

So a Beijing worker could maintain similar commute times but skip the exorbitant Beijing housing costs by opting to not live in Beijing.  And unlike suburban car drivers idling in traffic, Tianjin train travelers can use their commute time productively by reading or using the on-board Wi-Fi – all while leaving a much smaller carbon footprint.

Sources:

http://www.beijingchina.net.cn/transportation/train/train-to-tianjin.html)
http://www.numbeo.com/property-investment/city_result.jsp?country=China&city=Beijing
http://www.numbeo.com/property-investment/city_result.jsp?country=China&city=Tianjin
http://www.deptofnumbers.com/affordability/oregon/portland/
http://www.smartplanet.com/blog/smart-takes/top-10-cities-with-the-worst-commute-global-edition/8501

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