Risk of blow up in China’s property market rising
Property bubble in China is not a new topic. Economists have for quite a long time deliberated over the meteoric rise of home prices, and the runaway pace of new construction. There have been a lot of reports on “ghost cities” — newly constructed Chinese municipalities that were never occupied — led to frequent warnings of a crisis, which has not yet materialized.
Others problems that expert point out are rapid credit growth and backward economic incentives. However, the debate about China continues to heat up as some experts argue that the boom is sustainable, especially as hundreds of millions of Chinese migrate into urban areas. The real estate sector in China forms around 16% of GDP.
There have been reports that in third tier and four tier cities ailing developers are offering big discounts to unload property quickly. The data released by the Chinese government is of very little help in assessing market risk. Prices are only offered for the largest cities. A lot of data has not been revealed.
Source: CNN
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