Deja Vu As China Enters 2014 With Higher Home Prices

Jan 19 2014, 3:06am CST | by

Deja Vu As China Enters 2014 With Higher Home Prices

The Chinese will face another year of rising home prices.

According to the National Bureau of Statistics, 65 out of 70 cities surveyed saw home prices ending the year higher than they were a month prior.  January is unlikely to be an exception, as China  housing remains on performance enhancing drugs.

November data showed prices relatively stable, but up a tad in Shanghai, Guangzhou, Beijing and Shenzhen, China’s busiest cities. Prices are up less than half a percent, however, in the month long period.

High home prices are mostly the cause of higher incomes and lackluster financial options for wealthy Chinese, who prefer to use housing as a store of wealth. But that kind of investor demand has driven up prices in cities that actually lack housing, especially the affordable kind, putting pressure on China’s middle and lower income earners which constitute the bulk of the nation’s population.

Home prices in China have climbed to a level that some say could trigger a financial crisis, though that call has been made for the past five years.  In the meantime, municipal level banks, which also fund developers of real estate projects, have been given warnings by the Central Bank about its non-performing loans (NPLs).  Although the NPLs for municipal banks is not entirely transparent, nor is it clear that the bulk of the NPLs is due to bad real estate deals, the overall NPL number within China’s banking system is within international norms, according to the World Bank.

Still, home prices in Beijing and Shanghai have more than doubled in the past 10 years. Policymakers have tried to curb speculation and added numerous road blocks to housing, including punitive taxation and higher down payment requirements. Nothing has tamed the market.

A big price correction in the Chinese real estate market is unlikely, as this is still a country controlled from Beijing. And Beijing doesn’t want a real estate bubble to burst.

Xin Zhiming, Big Picture columnist at China Daily, wrote recently that, “As people’s hopes to buy an affordable home are dampened by rising prices, they may become less confident in policymakers, which, in the longer term, will prove a problem even bigger than real estate price corrections.”

According to the National Bureau of Statistics report, released on Saturday, all 70 cities except for Wenzhou reported gains in new home prices. First-tier cities continued to record month-over-month price hikes, new home prices in Beijing and Shanghai up over 20% from December 2012 levels.

The Hottest Real Estate Markets On Earth

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

OPEC decides against oil production cut despite price slump
Viena, Nov 28 (IANS) The ministers of the Organization of Petroleum Exporting Countries(OPEC) decided here Thursday to maintain its output level despite crude oil price fell to a four-year low level.
 
 
18th Saarc Summit concludes with one pact, several understandings
Kathmandu, Nov 27 (IANS) The 18th South Asian Association for Regional Cooperation (Saarc) Summit concluded in Kathmandu Thursday with the adoption of a 36-point Kathmandu Declaration.
 
 
British supermarkets sold contaminated chicken
London, Nov 27 (IANS) Eight of the every 10 fresh chickens bought from British supermarkets this summer were contaminated with the potentially lethal food-poisoning bug campylobacter, the food watchdog has said.
 
 
SJVNL signs pact with Nepal for hydro-power plant
Kathmandu, Nov 27 (IANS) Indian public sector company Satluj Jal Vidyut Nigam Ltd. (SJVNL) has signed a project development agreement with the Nepal government for executing the 900 MW Arun-III Hydro Electric Project in eastern Nepal, officials said Thursday.
 
 
 

Latest from the Network

OPEC decides against oil production cut despite price slump
Viena, Nov 28 (IANS) The ministers of the Organization of Petroleum Exporting Countries(OPEC) decided here Thursday to maintain its output level despite crude oil price fell to a four-year low level. The decision to...
Read more on Business Balla
 
12 killed in bus accident in Egypt
Cairo, Nov 28 (IANS) At least 12 people were killed and three others injured Thursday as a passenger bus overturned into a canal in Egypt's Beni Sweif province, around 120 km south of the capital Cairo, media reported...
Read more on Politics Balla
 
Explosions, gun fire rock Kabul diplomatic enclave
Kabul, Nov 27 (IANS) Two explosions followed by gunfire rocked the diplomatic enclave here Thursday night, a security officer said. The area of the blast is close to the Tajikistan embassy. The incident occurred in...
Read more on Politics Balla
 
Saarc leaders' wives ladies go sight-seeing at Bhaktapur
Kathmandu, Nov 27 (IANS) While the Saarc leaders conferred on regional matters at the tourist resort of Dhulikhel, their wives drove to the World Heritage Site of Bhaktapur to enjoy the sights of the ancient city. The...
Read more on Politics Balla
 
Maria Shriver 'disgusted' by Miley Cyrus's party
Patrick Schwarzenegger's mother was ''disgusted'' by Miley Cyrus's birthday celebrations. Maria Shriver - who, along with Arnold Schwarzenegger, are the parents of the 21-year-old actor - is reportedly ''very worried''...
Read more on Celebrity Balla
 
Kim Kardashian and Kanye West planning nude photoshoot together?
Kim Kardashian West and Kanye West want to do a nude photoshoot together. The couple are reportedly keen to pose naked alongside each other, after the 34-year-old 'Keeping Up With The Kardashians' star recently stripped...
Read more on Celebrity Balla
 
Robert Pattinson put on diet by FKA twigs
FKA twigs has put Robert Pattinson on a diet. The 'Two Weeks' hitmaker - who has been dating the 'Twilight' star since summer - is reportedly so unimpressed with her boyfriend's poor fitness levels that she decided to...
Read more on Celebrity Balla
 
Cate Blanchett 'proud' of Emma Watson
Cate Blanchett is proud of Emma Watson. The 'Blue Jasmine' star has praised the 'Harry Potter' actress for her speech on gender equality for the United Nations (UN) in September this year. Speaking to Porter magazine,...
Read more on Celebrity Balla