China’s home-buying frenzy sweeping across the country’s major metropolises and provincial capitals has reached even its smaller cities, according to Reuters. The increase in demand is welcome news for smaller cities that have a massive overhang of unsold houses left from the last real estate downturn three years ago. However, the surge in construction threatens to outpace or match the increased demand for housing, leaving housing inventories untouched. That will be a worry for China’s policymakers, who want to keep the real estate market stable ahead of a once-every-five-years Communist Party congress in the autumn that will see a reshuffle of senior leaders. Property analysts say property demand in such smaller cities has surged because local governments offer cheap credit and impose next to no restrictions, unlike in the bigger cities, where defenses are in place to fend off speculation and prevent formation of property bubbles.
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