[photopress:shanghaiproperty4_1.jpg,full,alignright]The boom in Chinese property prices that has generated big profits in key cities like Shanghai and Beijing this decade may be slowing down.
Michael Hart, China head of research for Jones, Lang and LaSalle of Chicago and one of best known Chinese real estate analysts, said, ‘In general, the days of the easy 20 percent flip are over.’ Increasing supplies of new real estate projects and government policies aimed at cooling off prices are taking some of the wind out of the industry.
The biggest factor is the action of the government to try and keep housing afforable. Serious worries have been expressed by top government officials that the cost and availability of housing is getting too high for ordinary people in a country where per capita income is still around $1,000 a year.
In the past year, new tax rules and other curbs have been put in place to brake price increases, above all in Shanghai, China’s international business hub.
Michael Hart says that it used to be that in Shanghai, for instance, a 10 percent annual increase in prices was enough for investors to make money. Now, after a round of new taxes and regulations, an annualized return of 23 percent is needed.