China’s Real Estate Boom is Back

According to The China Daily, “Real estate sales up, prices soar,” in China’s real estate market. The boom apparently is back on in a big way – thanks to one sale – a parcel of land in the capital, Beijing, was sold for a record price. “The bidders have gone irrational. A bubble in Beijing’s property market is definitely there,” said Pan Shiyi, chairman of property giant SOHO China.

They are quoting a number of real estate agents as seeing “daily price growth” and according to one property broker, Homelink, “residential property appreciated 6.5% in the past week alone.” Far be it for me to suggest that it is impossible to make a statement like this, especially with no figures to back it up, and I suspect the Chinese government of attempting to “talk up the market.”  I have no idea how successful they might be, seeing as average home prices are currently 23 times average family income and I understood there was more than 100 million square feet of empty office space in Beijing. Back in  May, the central government lowered the requirement on developers’ minimum capital fund from 35% to 20% of  investment needed, but it is hard to see that having such a drastic overnight effect.

Some are wondering at the apparent attempt to re inflate the housing bubble, when at the same time the vast majority of the population are in no position to be able to afford a house or apartment. “I just can’t understand why our provincial government has issued a string of policies earlier this year to prop up the real estate industry while so many people cannot afford to buy a home,” said Yang Anjing, an employee with a consulting firm in Guangzhou.

China Daily