China's Ever-Rising Property Market - Gallery
House prices of the 100 Chinese cities surveyed rose again in October 2013, the 17th consecutive monthly rise, by 1.24% to an average of CNY 10,685 (US$ 1,742) per square metre (sq. m.)
Investment drives China’s economy. And housing fuels a large share of that investment, contributing 33% of fixed-asset investment, says Zhang Zhiwei, an economist at Nomura—and, consequently, 16% of GDP. The decade-long housing boom that’s kept China’s GDP aloft has so far defied the bubble warnings, which began as far back as 2007.
For decades now China's skyline has long been dominated by skyscrapers with endless height as the country's population moves more and more into urban dwellings. The race to the sky has had its effect on the land below and property prices have been on the rise ever since. The city of Nanjing has quite a scenery of tall urban dwellings as replicated elsewhere.
For each person that moves to a city this year, Chinese developers will build around 121 square meters of shiny new flooring, estimates Zhang. That’s double what there was in 2009, and a marked increase from 2013′s 113 square meters.
Though residents trading up to roomier digs will absorb some of this, the Nomura folks nonetheless say they “find this alarming,” putting China’s per capita floorspace on par with much more developed markets.
In March 2013 new policies were introduced by the State Council aiming to control skyrocketing house price increases :
- Every first quarter of the year, major cities should publish an annual housing price control target.
- Cities with overheating housing markets are to raise their commodity housing and land supply, while cities with declining prices should keep prices stable by stimulating housing demand.
- In cities where price hikes exceed their price control targets, local People’s Bank of China (PBOC) branches will increase down payment requirements.
- Tighter mortgage restrictions on second home purchases will be implemented in banks. Buyers without a local registration are barred from buying more than one property.
- Banks should not give loans to developers that hoard land and participate in price-inflating activities.
- Local governments must boost low-income housing production.
- The government will continue to reform property taxes, to include an extension of the trial holding tax from Shanghai and Chongqing to other cities, and a transaction tax.
In some markets, developers are also worried about an oversupply of homes. Developer DoThink Group last week said it cut prices by 12.2% at its North Sea Park project in the eastern Chinese city of Hangzhou to 15,800 yuan ($2,592) per square meter from 18,000 yuan per square meter. It said late last week it started discounting apartments at its 12-tower high-rise project, which had been on sale in phases since April 2012.
Excerpts from: Global Property Guide (www.globalpropertyguide.com) | The Wall Street Journal (online.wsj.com) | Quartz (qz.com)