Soaring China property prices raise worries over bubble

[GoFlyKiteNow]

Soaring China property prices raise worries over bubble, leave many unable to buy own homes

By ELAINE KURTENBACH , Associated Press
Last update: March 9, 2010 - 9:14 PM

"We will resolutely curb the precipitous rise of housing prices in some cities and satisfy people's basic need for housing," Premier Wen Jiabao

SHANGHAI - The luxury apartment buildings Yang Xuhua passes on her way to work are a daily reminder of her own frustrated efforts to buy a home. Prices for even modest apartments in Shanghai have soared, putting home purchases out of reach for white collar workers and professionals.

Yang and many other young Chinese are finding their aspirations thwarted by an overheated property market that is enriching already wealthy speculators, local officials and other Communist Party allies.

It's a hard reality for a generation that views home ownership as a given after reforms more than a decade ago created a housing market open to the masses. It's also a challenge for leaders whose reliance on rising property values and land sales to property developers risks letting the market spiral out of control.

"I sigh at every fancy apartment building I see on the way to work everyday, but that won't change anything," says Yang, whose train ride to work at a trading company takes her past legions of high-rise apartment blocks. "My salary increases but it can't catch up with rising housing prices."

The issue is getting top billing at China's annual legislative session, the party's main forum for explaining its policies and responding to public complaints.

pledged in his annual address to lawmakers, China's equivalent of the State of the Union speech.

The government has raised taxes and required downpayments — now a minimum 30 percent for even first-time home buyers — and warned big state companies and banks against speculative, risky investments. But no major immediate changes are expected.

"Chinese top leaders have become more and more sensitive to strong nationwide voices on issues, but the sensitivity is only at the PR level," says Ding Xueliang, a China expert at Hong Kong's University of Science and Technology.

 

[ps07857]

the grass always looks greener on the other side...... it's the same here in SG, in the US, the UK and even in China.... (MBT will say something along that lines in a few months.... mark my words!)..... so Singaporeans should be less choosy....

 

[mustspeakup]

i think we should onli choose after the bubble bursts...

one thing is for sure, the faster is goes up, the further it goes down...

 

[longbow]

There is a bubble and Beijing is trying to moderate growth. But given huge growth in household wealth this would not be surprising.

 

[longbow]

This is what I was talking about.

Top 10% of pop saw 255% rise in income over 6 years or about 40% rise a year.

When you have such fast increases in household income you will have huge spike in luxury housing and goods.




A Credit Suisse survey of Chinese consumers shows that average household income has increased over the past five years, while the average saving rate has decreased, Beijing Youth Daily reported on January 13.

The survey results were a stark reminder of China's growing inequality gap between the rich and poor. While all income groups saw their incomes increase, wealthy families had an increase five times that of the poorest households.

The income of the top 10 percent of households accounted for 35.7 percent of the total income, up from 24.3 percent in 2004. Their income rose 255 percent to 34,000 yuan (US$4,980.2) a month since 2004.[/I]

In contrast, the middle class had a 98 percent increase in income since 2004, while the bottom 20 percent of households saw their income rise 50 percent – most likely because of the growth in agricultural profit.