Chinese official: party is over for China’s real-estate speculators

Huang Qifan, deputy secretary-general of the China International Exchange Center, said that based on house prices in 2000, China’s average house price was about 1,000 yuan (1 yuan is about 0.14 US dollars), and now it is about 10,000 yuan, with the average 10 times price increase. But he said that this trend would not continue.

There were predictions of the bursting of the Chinese housing bubble in the past. The Chinese government has been “postponing” it because real estate is a major source of income for local governments.

According to Chinese mainland media Sina, Huang Qifan mentioned on December 26 the reasons for the 10-fold increase in Chinese housing prices:

  1. supply and demand.
  2. Price factors are often monetary phenomena. If more currency is issued, prices will rise. In general, in the past 20 years, China’s currency has been over-issued, and the growth rate of the currency is the highest. But the reason why it did not affect other social goods is that the real estate played a key role in absorbing excessive currency to maintain balance in other sectors.
  3. RMB exchange rate.

He believed that those three factors pushed China’s house prices up in the last 20 years would not exist in the next 10 years. In general, China’s house prices will not fluctuate much going forward.

Regarding the trend of housing prices in 2020, China’s high-level economic conference pointed out that it would continue to adhere to the “no housing speculations” policy.

Real-estate had been the “cash” machine for the Chinese local governments. It remains to be seen whether the local governments can wean themselves from the easy money while sinking deeper into debts.

The Chinese government seems to be betting on cryptocurrency to get itself out of the economic crisis while defeating the U.S.

Source: Chinese State Media

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