(Yicai Global) Dec. 21 -- Buyers who bought homes at steep prices in a town neighboring Beijing a few years ago have stopped repaying their home loans after prices collapsed in the wake of property market restrictions and the pandemic.

One such homeowner said he bought a house in Yanjiao, east of China’s capital city, for CNY4.3 million (USD675,000) in 2017. Over the past four years he paid back CNY160,000 (USD15,100) in principal and CNY640,000 in interest. The man stopped paying after the house’s value plunged to CNY2.35 million.

Yanjiao’s house prices skyrocketed after 2016, as the town is only five kilometers from Beijing’s Tongzhou district. Some sold for up to CNY40,000 (USD6,300) per square meter in 2017, according to data from online real estate marketplace Anjuke. The figure had more than halved to CNY18,700 per sqm last month.

Another homeowner, Zhang Jing, secured a 30-year mortgage for CNY1.6 million (USD250,000) to buy a house in Yanjiao in 2016, but went into arrears in September 2019. Last July, a court ruled that Zhang must repay to the bank principal of CNY1.58 million, interest of CNY58,000, and a penalty of CNY1,700 (USD270) within 10 days.

Houses in Zhang’s area were priced at CNY6,000 per sqm when they went on sale in 2002, but are now selling for about CNY20,000 per sqm on average, down more than 30 percent from the peak, a local property market insider told Yicai Global. The buyers who have halted repayments acquired second-hand properties in the area in the past two years, the person added.

Increasing numbers of young people who work in Beijing are buying houses in Yanjiao despite fluctuating prices because new subway lines to the capital will open in the future, buoying the market for homes in areas where there are plans to build subway stations.

But analysts believe the era of booming house prices in Yanjiao has ended, regardless of any future transport links. Prices will rise and stabilize at a reasonable level because the town does not come under Beijing’s administration, it comes under that of Sanhe city in Hebei province, so medical and educational resources are limited, they noted.

Editor: Futura Costaglione