Suspicion about the overheated real estate in several Chinese cities

The current state of the continuous rise in sales prices of homes in several major Chinese cities including Beijing, Shanghai, Guangzhou and Shenzhen concerned and worried everyone. The weekly "Liaowang (Observation) issued to that subject an article indicating that one of the main reasons why house prices in these cities continue to beat all records of the past despite the economy China is still in the recovery of the slope is the great movie recently on the market of selling luxury homes and luxurious, while the sellers of these upscale homes have all without exception played the 'map investment ', that is to say that the so-called' nature of scarcity and failure ', who plays for the investment value, is the main reason for the sale of housing prices high.

Whether in Beijing, Guangzhou, Hangzhou and other cities whose housing markets are in turmoil this year after several rounds of price increases, housing prices are currently at a very high level and is close to d 'reach the historic summit. Guo Shiping, Director of the Institute of International Finance at the University of Shenzhen, and other specialists in the field have indicated that there are great suspicions against housing prices in these cities because they them as detached from the main aspect of our economy. Firstly, the Chinese economy is currently still in the recovery phase and it does not yet know a warming track. GDP growth reached 7.1% during the first half of this year, while the price of housing is far greater than GDP growth, which has a tendency to overheat. One can cite the example of Shenzhen, compared with house prices in January, prices rose by 64.3% in August, while at present, Shenzhen is still finding difficulties in its exports and manufacturing industries, which proves that he has not gotten rid of the crisis and its overall economic situation can not withstand so overheated property market.

Then, in those cities where house prices have broken all records, the volume of the successful sale of homes experiencing a decline in general and a sizeable reduction. The data clearly show that in August the total number and total area of new homes sold amounted respectively to 4114 units and 386,000 square meters, a decrease of almost 20% and 25% from the previous month and is continuing the downward trend that began last May on the real estate market in the city.

As the market situation is currently supported by investment, environment specialists interviewed without exception expressed their worry and concern. Guo Shiping think monetary policy is likely to change and that if this policy will be tightened, it is possible that housing held by many investors will be sold in large quantities on the market, and this time, people who bought homes at the current high prices would then face the loss of their property and at the same time, banks accumulate large risks.

Experts have said that 'high land prices' first lead of the rising 'stock price' and then it will be that land prices will increase even more.

As for Yougene Qian, Director of land transactions in the city of Nanchang, he said that housing prices in many cities have seen an increase this year "by leaps and bounds" and that the increase will be difficult to impetuous monitor and maintain, which shows that the Chinese real estate market has not yet reached maturity and did not accede to the circular stage sound. The frequent occurrence of 'land kings' is no good, because some are higher compared to prices of homes located nearby. Besides their ability to create this rising house prices, the large amount of unused funds are sleeping in the property sector and this is a great loss for the macroeconomy.

According to him, there are rules and provisions hidden and latent whatsoever in the land market or whether the real estate market. Public companies have no fear of high land prices, because their goods are in their capital accounts and provided they had any land they could then apply for funding to carry out a project, while the losses have incurred would be offset elsewhere. As for listed companies, it is necessary and important for them to have good success in order to keep prices of their shares, and conversely, developers will be forced to spend more to acquire more land . Thus, real estate companies listed will come in a vicious circle characterized by 'high land prices - high prices of shares - land prices even higher. " "Public companies currently have no problem of funds, publicly traded companies can use money from punters. Large systematic risks caused by land prices and high prices will ultimately be borne by financial institutions and stock markets and anyway, it will always be ordinary people who foot the bill and who will suffer. "

Lin Zengjie, director of studies at PhD Candidate, Department of Land Management of the Renmin University of China, said that in the current situation where house prices have beaten once again records the past, this marks the growth of the housing bubble. Given the macroeconomic situation, including the 'three horses' causing the Chinese economy in recent months, exports continued to register negative growth, while the CPI (index of consumer prices) continues its decline and income residents has not increased much. For now, the main problem is that the storm created by speculative investment in the property market is still strong, but it certainly will not last long.

Experts have said the current price of new records created by the housing prices going against the tide certainly exert a considerable pressure on improving the welfare of the population and that this could once again reach the sensitive nerve that is the gap between rich and poor. And especially the phenomena of recent times, such as agitation in the sale of luxury homes and lavish advertisements on wealth and fortune, selling tens of thousands of yuan, the rich layers of society who spend one time tens of millions who are likely to generate dissatisfaction and discontent of the masses of the weaker sectors of society and the evolution of the situation deserves to be taken into account in particular.