Millions of Chinese are pursuing property with a zeal once typical of house-happy Americans.
By Daniel at 4 January, 2010, 6:57 pm
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Some Chinese are plunking down wads of cash for homes. Others are taking out mortgages at record levels. Developers are snapping up land for luxury high- rises and villas, and the banks are eagerly funding them. Some local officials are even building towns from scratch in the desert, certain that demand will not flag. And if families can swing it, they buy two apartments: one to live in, one to flip when prices jump further.
And jump they have. In Shanghai, prices for high-end real estate were up 54 per cent in September, to US$500 a square foot. In November alone, housing prices in 70 major cities rose 5.7 per cent, while housing starts nationwide rose a staggering 194 per cent.
The real estate rush is fuelling fears of a bubble that could burst later this year, devastating homeowners, banks, developers, stock markets, and local governments.
“Once the bubble pops, our economic growth will stop,” warns Yi Xianrong, a researcher at the Chinese Academy of Social Sciences’ Finance Research Centre. On December 27, Premier Wen Jiabao told news agency Xinhua that “property prices have risen too quickly”. He pledged a crackdown on speculators.
In Beijing’s Chaoyang district, which represents a third of all residential property deals in the capital, homes now sell for an average of almost US$300 a square foot. That means a typical 1000sq ft apartment costs about 80 times the average annual income of the city’s residents.
POP
- doubledutch
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