All of these real estate hosing down moves come as speculators continue to drive property values up at double-digit rates in many big cities, even as tens of thousands of homes and whole apartment buildings sit empty. Houses in Shanghai now cost 90 times more than average incomes.
What in part caused the bubble has partly been that local governments, and by extension many state-run companies, now rely heavily on property sales for revenues. In fact, many local politicians are desperate to keep the boom going.
McCleans.CA reported, Terry Sicular, an economist at the University of Western Ontario who studies China, said, “Beijing has tried using standard policies like increasing taxes on land transfers to cool down the real estate markets and it didn’t work.
“Now they’re trying to restrict the amount of development. It may be effective for a short time, but it doesn’t fix the underlying problems.”