China Property Market Begins To Cool

China’s property market has been booming in recent months and years and this has led to property prices increasing too. In fact, in the major cities in China, property prices are said to have increased at least fivefold over the last decade. However property investors are warning that the property price increases are unsustainable and many are holding back from buying any new real estate in the country.

According to some reports, some developers are now offering discounts of up to 35% on new properties. This has led to some discord as previous investors have paid much higher prices and have not been able to benefit from these new buyer discounts.

Some analysts have warned that property prices may drop by a massive 20pc over the next two years as current prices are unsustainable and unrealistic.

A decade ago, China’s property market started to boom after authorities privatised a large percentage of housing stock across the country. According to state media, in 2000 there were just 1,000 second-hand home sales in Beijing; last year saw well over 200,000 sales. As prices increased, many people saw property as a wise place to invest money and this pushed price and demand up even further.

However the writing has been on the wall for a while. Authorities took measures last year to try and cool the property market down by introducing things such as restricting the number of properties people could own and increasing the minimum downpayment required for property purchases. Partly, these measures were introduced to help ensure that housing was more affordable for more people – and to stop property investors adding to their already large portfolios.

These measures are now starting to take effect and many believe that property prices in China will now start to decrease to a more sustainable, affordable level.

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