It seems US media has convinced itself a China real estate bubble exists – perhaps a case of wishful thinking. And China’s real estate market is the backbone of its domestic economy.
One theory advanced supporting the bubble theory is that the ratio of real estate prices to incomes in Beijing is 27-1. Apply that ratio to Manhattan, the average price of an apartment would be $3.4 million.
The Street.com states firmly the only fair method for comparing relative valuation and affordability is to compare the ratio of after-tax incomes for an average couple to the price of the average real estate in each city, and then attempt to adjust for the real purchasing power of each couple’s incomes.
Bit difficult to follow but if the figures are correct on that basis there is no real estate bubble.