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  • » 07/09/2010, 00.00

    CHINA

    Property speculation leaves 64.5 million vacant homes in China



    Speculation in the real estate market has generated such a high rate of housing vacancy that it could lead to social disorder and financial problems, an economist with the Chinese Academy of Social Sciences says. The government, meanwhile, crosses its fingers.
    Beijing (AsiaNews/Agencies) – At least 64.5 million houses are lying vacant in China. This is sign that the property market is in for a tough time in the not so distant future. Indeed, the mainland’s real estate sector is dangerously overheated, and could threaten the country’s financial and social stability, a prominent economist wrote in an official newspaper today.

    Yi Xianrong, an economist at the Chinese Academy of Social Sciences, noted that estimates from electricity meter readings show that 64.5 million apartments and houses stand empty in China’s urban areas, many of them bought by people counting on a constantly rising property market.

    Writing in the People's Daily, Yi said the level of empty housing was “shocking”.

    “If this outsized property bubble does not burst, it will hurt residents' well-being, and also affect national financial security and co-ordinated national economic development,” Yi wrote.  In his opinion, the overheated property market was misallocating resources, distorting prices and squandering the wealth created by economic growth.

    Even though the article was published in the newspaper’s overseas edition, that it was published at all shows how much the government is afraid of the bubble and the instability it might generate.

    Indeed, Beijing has already adopted a number of measures over the past few months to cool the property market, including raising down payments and mortgage rates. However, they do not seem to have had the desired effect yet.

    Property prices continue to rise nationwide, 0.2 per cent last May. This is especially hard for the weakest segments of the population.

    “The problem now is that investment in the domestic property market has completely overturned China's traditional concepts of wealth management,” Yi explained.

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    See also

    11/01/2010 CHINA
    Dangers looming over China's economy in 2010
    A property bubble and inflation could offset last year's huge stimulus package. The economy is expected to grow16 per cent this year. In the first week of January, banks provided loans to the tune of 600 billion yuan.

    06/07/2010 CHINA
    Real estate bubble close to bursting
    Renowned expert Kenneth Rogoff says bubble would inevitably affect China’s banking system and open the door to another crisis. He urges Beijing to rethink its development strategy. Other experts disagree.

    01/06/2010 CHINA
    Chinese growth slowing down again in May, Wen Jiabao voices concerns
    The growth in manufacturing activity is slowing down because of the European debt crisis and government measures to rein in the real estate boom. In Tokyo, Chinese PM Wen warns against the dangers of a second slump, but believes China is on track.

    19/01/2010 CHINA
    In 2009, property sales reach 4.4 trillion yuan
    Property prices are rising non-stop, especially in the big cities, favoured by easy bank loans. The government is concerned about speculation, which excludes many people, because it could cause huge losses in the financial markets.

    06/02/2009 CHINA
    Life sentence for creator of Pudong district, Shanghai's showcase neighborhood
    Kang Huijun has been found guilty of corruption, in part because he took money in exchange for lucrative contracts and land sales. For 3 years, wealthy Shanghai has been at the center of the worst corruption cases in the country.



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