China’s recent moves to ease curbs on the real estate sector have sent prices soaring recently, stoking fears that new property bubbles are forming, state media reported yesterday.
Residential property prices in Beijing’s Central Business District rose 6.5 percent in the past week and demand for second-hand houses in some other areas is four times the supply, said the China Daily, citing brokerage Homelink.
It said a land parcel in Beijing, which was withdrawn from a public tender because of a lack of bidders only 15 months ago, was auctioned off on Monday for a record US$585 million.
“The bidders have gone irrational. A bubble in Beijing’s property market is definitely there,” Pan Shiyi (潘石屹), one of the bidders that day and chairman of leading developer SOHO China, said after the auction, the report said.
In Shanghai, developers of the luxury Tomson Rivers apartments, priced at more than US$14,600 per square meter, sold at least 10 units last month, the report said.
That compared with sales of only four units since the project was marketed four years ago, it added.
In the southern city of Guangzhou, the downtown housing price reached US$1,600 square meter in May, close to the record high of US$1,700 in October 2007, the report said.
“One thing we are concerned about is whether there is a new bubble being shaped,” the report quoted China Real Estate Association (中國房地產業協會) secretary-general Gu Yunchang (顧雲昌) as saying. “The possibility of a bubble is pretty big.”
China’s real estate industry was dealt a heavy blow after Beijing introduced new measures in 2007, including raising down-payments on second homes to rein in market speculation, which led to slumps in prices and transactions.
However, the financial crisis prompted authorities to relax the curbs, with local governments relying on preferential policies to boost demand, as the sector is a key driver of growth, the paper said.
Meanwhile, China’s central bank Governor Zhou Xiaochuan (周小川) said boosting the nation’s consumer spending to redress global imbalances is “easier said than done.”
Zhou said that because it was so difficult to adjust income distribution to encourage consumption, expanding investment, the key component of the nation’s 4 trillion yuan (US$585 billion) stimulus package, is the “second-best” option.
He spoke at a conference in Beijing yesterday.
China should take measures to prevent investment from ending up idle, Zhou said.
Rising savings in the US, China’s second-biggest export market, may result in lower demand for Chinese goods, risking overcapacity and slower economic growth, he said.