China: Cash Shortage, Rising Housing Prices
Recently, China’s real estate market appeared chaotic.
On the one hand, sellers sell houses at a low price for cash;
on the other hand, thousands of buyers rush to buy houses.
Not long ago, a cash shortage in China was followed
by a stock market crash.
The public speculates that a major real estate market
adjustment should take place next.
What’s the reason behind it?
Let’s take a look.
In late June, China’s stock market underwent tremendous
fluctuations after the banks’ shortage of cash.
However, national statistics show that
housing prices still went up.
In June, housing prices increased 10% year-on-year.
In first-tier cities, new home prices went
up 20% year-on-year.
In several leading cities such as Hangzhou, Shanghai,
and Nanjing, people rush to purchase their homes.
Insiders said that the current phenomenon, with so many
people buying homes, is a “retaliatory rebound.”
Xie Tian, professor at Aiken Business School, University
of South Carolina: “This is the last gamble.
They hire fake buyers to create panic, so as to press
the government, and established a panic environment for home buyers.
Thus, they can continue to raise housing prices.”
Last Friday, apartments located in a suburb of Guangzhou
went on the market starting from 280,000 yuan (US$45,600).
On the same day, they received
more than 30,000 visitors.
In another area in Guangzhou, a special offer was given
on apartments, which started from several tens of thousands of yuan.
Many buyers expressed happiness for the cheap deal.
Xie Tian: “I believe the price crash has begun.
The entire real estate bubble burst is already underway.”
Last week in Beijing, three apartment buildings went up
for sale, and two of them sold on the listing day.
Lu Zhaokai, a property consultant, told NTD that although
the government continues to adopt a housing price control
policy and charge high taxes, since 2008, Beijing’s
home prices have been constantly increasing.
Lu Zhaokai: “People are gathering to Beijing.
Many senior officials live in Beijing.
They bought homes in Beijing,
and housing prices certainly went up.
In Beijing’s third and fourth ring areas,
people only have a chance to buy an old house.
If the old property is too good, it’s normally not for sale,
if you want to buy it, you need to pay a high price.”
Sources said that some home buyers rigid demand to buy
thus helping sellers to ease fund shortage problem.
A large amount of financial products, private funds and
banks loans were deeply infused into the housing market,
coupled with 70 billion yuan (US$11.4m)
of foreign financing.
A money shortage doesn’t seem to damage
the housing market.
The government’s release of large bank notes are also
pushing the housing prices up.
Economist Mao Yushi: “I suspect that the distribution
of the wealth is concentrated in a few hands.
They worry about inflation, the devaluation of money,
thus they bought properties.”
China’s entrepreneur Ren Zhiqiang has said that
“a cash shortage would effect housing prices.”
Ren believes that a long-term money shortage would
certainly influence the real estate industry.
Without money occupying the land, the housing market’s
supply and demand will worsen, causing housing prices to rise.
Feng Xingyuan, deputy director of Beijing
Unirule Institute of Economics, said that
since the Chinese Communist Party is piloting
a property tax plan,
real estate sellers who owned many homes over the years
may sell houses at a discount in order to avoid paying tax.