Housing prices in 70 large and medium-sized cities across China rose 7.8% year-on-year in December, the fastest increase in 18 months, the Financial Times reported. The data, which compares to gains of 5.7% and 1.2% in November and October respectively, adds credence to fears that a bubble is forming in China’s real estate market, driven by the huge surge in bank lending over the past year. Around 20% of loans extended by banks go into the property sector, including individual mortgages and loans to developers, according to Wang Zhaoxing, vice chairman of the China Banking Regulatory Commission. Individual mortgage loans totaled US$139.4 billion in the first eight months of 2009, nearly four times higher than in the same period of 2008. This week Beijing ordered banks to stop paying commissions for bringing in mortgage loan customers and also tightened reserve ratio requirements for commercial lenders.
