It’s nice to know that Americans aren’t the only people in the world that believe real estate prices can never stop going up. Apparently the Chinese share our affinity for bubbles.
From MarketWatch, real estate prices in China are going through the roof:
Beijing’s property prices are climbing at an unsustainable rate, with residential property in the city center leaping 6.5% in the past week alone, according to a report Friday in the state-run China Daily newspaper.
The report, which cited data from property broker Homelink, said some neighborhoods have seen demand for apartments at four times the number of units available.
“We used to talk about monthly price growth, but recently, it’s more about daily change,” the report quoted a Homelink broker as saying.
Developers such as Hong Kong-listed Soho China Ltd. are also worried about the run-up in prices.
“The bidders have gone irrational. A bubble in Beijing’s property market is definitely there,” the report quoted Soho founder and Chief Executive Pan Shiyi as saying.
The report said other large cities across China were seeing a similar phenomenon, with industry leaders now worried that the market is priming for a big drop at some point in the future.
“One thing we are concerned about is whether there is a new bubble being shaped. While people have a strong perception of excessive liquidity and further price growth, the possibility of a bubble is pretty big,” it quoted Gu Yunchang, secretary-general of the China Real Estate Association, as saying.
Recall, if you will, that the government has been pouring money into the economy in order to ward off the effects of the global recession. Ostensibly intended for infrastructure, there continue to be reports that the banks are essentially financing stock, commodity and real estate speculation. Looks like those reports might have some substance.
There may be an opportunity here to close the deficit with China. We have a huge head start in doing short sales, foreclosures and loan modifications. Somebody get to work figuring out how to cash in on this expertise!