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Property prices cooled down, but potential bubble still lurking around

08-22-2011 09:10 BJT

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Since early last year, the government has unveiled a slew of measures to cool down the property sector. Recent data shows property prices in major cities in China are cooling down as expected. However, experts warn, despite the tentative success, the potential bubble is one of the biggest risks facing China.

Housing prices have long been the most sensitive issue for many Chinese people. It is the first time in three years that property prices in top cities of China were flat on a monthly basis in July.

Out of the 70 major cities, 14 cities saw property prices fall with 17 cities remaining unchanged. This is eastern Beijing's Tongzhou District, housing price here are on a roller coaster ride.

A Beijing resident in Tongzhou District, said, "The average housing price reached more than 20000 yuan per square meter last year, but they have dropped to 15000 yuan per square meter now. "

Real estate agents are having a tough time. Since early last year, the government has unveiled a slew of measures to cool down the property sector, with a crucial move in mid-July to expand its strict home purchase limits to smaller cities.

Ren Zhiqiang, a developer in Huayuan Property Co., said, "The latest statistics show that the central government's tightening measures are taking effect, and property prices in major cities are cooling down as expected. "

Ren Zhiqiang is a famous real estate developer in China, known by the public for his sharp remarks. He thinks the tightening measures can only provide a temporary solution but won't solve the fundamental problem.

Ren Zhiqiang said, "I don't quite agree with the current home purchase restrictions. The tightening measures put a limit on consumers' actual needs. And this is against the rules of a market economy. Only when the government largely increases the housing supply can we better regulate the real estate market."

The love-hate relationship between house buyers and developers is still going on. Despite the government's initial success, many experts still view the potential bubble as one of the biggest risks facing China. It is seen as a threat to the sustainability of the nation's growth model and to social stability because of simmering discontent about the lack of affordable housing.

Cai Hongyan, President of Real Estate Media Group, said, "The home purchase restrictions on the first-tier cities directly resulted in the rising property prices in the second and third-tier cities. And with more restrictions spreading to the smaller cities, this will cause a vicious circle. The consumers' need has been largely depressed."

With strict home purchase restrictions spreading up to second and third-tier cities, both developers and buyers have adopted a wait-and-see attitude in the past two months. but it is clear government curbs will continue and may be even tougher.


Editor:Zhang Dan |Source: CNTV.CN

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