Value is where dwelling floor space is

Some Chinese homebuyers don't appear to be too sure if the new residential property measurement standard is for good or for worse.

The Ministry of Housing and Urban-Rural Development said in a notice on its website that residential spaces should henceforth be traded in terms of dwelling floor space, or usable area, not gross floor area.

Now, usable area is smaller than gross floor area that includes balcony, and even communal areas like lobby. For decades, China has been using gross floor area as the standard measure in property transactions.

Following the notice on the website, which is still seeking public input, speculation mounted in the realty market on whether home prices will rise.

"We can't be certain that prices will rise due to the new system of measurement. Usable area or livable area is the international standard used in home sales," said Chen Sheng, president of the China Real Estate Data Academy.

Although the price of a single square meter will rise, the value of an apartment will not, said Mo Tianquan, chairman of Fang Holdings Ltd, in an interview to the Economic Daily.

Mo said the measurement in livable area is more accurate and scientific. "We know clearly our dwelling floor space, which will cause less confusion than the conventional gross floor area," he said.

My friend Wang Jue might agree.

Wang now works and lives in Tokyo. Back in 2015, she sold a 121-square-meter apartment in Shanghai's Pudong New Area at about 30,000 yuan ($4,467) per sq m.

With the proceeds, she bought a 74-sq-m flat in Tokyo.

Both properties have three bedrooms, one dining room and one bathroom each.

The Shanghai apartment is a bit larger as it has balcony. The Tokyo flat is in a better location.

Wang said: "When we bought it, the Shanghai apartment was semi-furnished. It was almost bare. It took my husband and me at least one month to move in.

"But we were able to move in to our Tokyo apartment in flat five days as almost everything needed was in place."

To raise standards in China, the Ministry of Housing and Urban-Rural Development notified that all the newly built residential buildings in urban areas should be fully furnished and kept in a move-in condition before the handover to the homebuyers.

"By setting certain standards, the government is trying to guarantee homebuyers a good quality of living just as in many other countries," said Chen.

In the past, there were some grey areas in the gross floor standard, which some developers exploited to "steal" communal space. This happened especially in lower-tier cities, according to Zhang Dawei, chief analyst at Centaline Property Agency Ltd.

"The new measurement standard is reasonable, both for homebuyers and for the healthy development of China's property market."