As 2009 draws to a close China’s property market shows no signs of cooling – and nor does the way the Chinese feel about it.
News that a high-end real estate development in a trendy Shanghai district sold for a record US$544million (RMB3.72 billion) this week – the second record-breaking mainland property sale in as many days – is only going to fuel fears that China’s property prices are spiralling out of control.
Independent economist Andy Xie warned back in August that Chinese stocks and properties were 50 to 100 percent overvalued, while branding Chinese asset markets a giant Ponzi scheme, with prices supported by appreciation expectations. As more people and liquidity are sucked in, Xie explained, surging prices validated expectations – correspondingly, as expectations rose more and more people were joining the party.
Beijing has already committed to tackling rising prices at both ends of the property market, urging banks not to let lending get out of hand, while also promising to build affordable housing in China’s cities. But so far government plans to curb the excessively rapid increase in property prices in certain cities, or build low-cost housing, have been largely incremental.
In the face of rising prices, Beijing’s inaction has many analysts worried, but it has convinced some that more concrete moves to rein in the market are inevitable. John So, an analyst at ICBC International Research, is one of those who expects property sales volume to drop next year as Beijing tightens the mortgage market. "We won’t see strong growth in property prices next year as new supply will increase substantially," he said.