China’s recent moves to ease curbs on the real estate sector have sent prices soaring which immediately brings the worry that bubbles are forming.
According to China Daily, citing brokerage Homelink, residential property prices in Beijing’s Central Business District rose 6.5% recently and demand for second-hand houses in some other areas is four times the supply.
It said a land parcel in Beijing, which was withdrawn from a public tender due to a lack of bidders only 15 months ago, was auctioned off for a record $585 million.
After the auction Pan Shiyi, chairman of leading developer SOHO China and one of the bidders that day, said, "The bidders have gone irrational. A bubble in Beijing’s property market is definitely there."
The report said that in Shanghai, developers of the luxury Tomson Rivers apartments, priced at over $14,600 per square meter, sold at least 10 units in June. That compared with sales of only four units since the project was marketed four years ago.
In Guangzhou, the downtown housing price reached $1,600 per square meter in May, close to the record high of $1,700 dollars in October 2007.
AFP reported that Gu Yunchang, secretary general of the China Real Estate Association, said, "One thing we are concerned about is whether there is a new bubble being shaped. The possibility of a bubble is pretty big."