After two consecutive years of government price adjustments and controls on real estate, prices are still jumping upward rather than declining. Shenzhen is indisputably the bellwether of this rising tide: housing prices in Shenzhen leaped 50% in the first half of this year.
Shenzhen has been going through an unprecedented real estate boom during the last 18 months; average housing prices have risen from 7,000 yuan (US$922) per square meter to 16,000 yuan (USD$2,109) today.
According the SW article, the primary reason is that supplements in the currency market are above their normal level. In other words, there is too much money in the Chinese market. Under these conditions, people will generally choose to spend their extra cash on investments, but Chinese people do not have many choices of places to invest. Most of them choose immovable property rather than the high risk stock market. At the same time, the rising RMB has attracted many foreign investors, bringing even more money into the market. Add in speculative buying and developer hype, and it's not very hard to understand the situation.
In the conclusion of the article, the reporter quotes an anonymous real estate businessman: "A crash is inevitable, maybe next year, maybe beyond. When that day comes, nobody can escape."
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Posted
Jul 12 2007, 04:13 AM
by
Danwei - Media, Advertising, and Urban Life in China