Real Estate in China

Since the beginning of the reform and opening of China, economy of main cities in China has developed at top speed. Beijing, Shanghai, Guangzhou and Shenzhen have become the first tier cities of China. As a result of the more job opportunities, better infrastructure and convenient living conditions, people from all over the China roll in the first tier cities for a better livelihood. The real estate market in the first tier cities keeps hot due to the big demands and investment hype. Some investors remain upbeat about real estate market in the first tier of China since there are not much stable investment options in China except the first tier city real estate market. Now the price of real estate in the first tier of China has been the world’s forefront looking from the absolute price.

At the beginning of 2016, the price of real estate in the first tier cities of China rises suddenly and sharply. Although Chinese government has issued regulation and control policies, it still cannot stop the pace of the rise of the price of real estate in the first tier cities of China which has risen 20% to 30% averagely. Notwithstanding soaring house price increases the panic of the housing bubble, there is still some people believe that the real estate market of the first tier cities of China will not collapse in a short time. Compared to the house price of the first tier cities of China, the rate of increase of the house price of the second tier cities of China is less, meanwhile the house price of the third or fourth tier cities decreases.

The excessive-priced housing brings a huge pressure to migrant workers who come to the first tier cities to live. Sometimes people who have a job with a respectable income still cannot bear the high real estate price. Generally speaking, for a family who does not have other income except the salary, buying a house in top tier city is almost impossible. In China, as well as in many other countries worldwide, for most families, the house loan account for the lion’s share of the family expenses.

According to the data of 2015, it is the first time that the population of permanent residents in Shanghai appears negative growth, felling 1.5% year on year. Due to the pressure of high housing prices, some of the migrant workers choose to escape from the first tier cities of China to the second or third tier cities with less living pressure and good-paying jobs.

Excessive-priced housing brings negative influence to the first tier cities. The increasing of the housing prices becomes a high threshold blocking for talents to come into the cities which influence the competitiveness of the cities. In addition, people’s perception of wealth and life will be changed by high housing prices, the investment willingness for industry will impair. And consumer market will be probably affected.

The real estate of China has played a pivotal role for the development of the economy of China. The industry drove up by real estate helps the economy of China. In the long run, to rely on the real estate to develop China’s economy cannot solve the fundamental contradictions. Chinese government shall adjust the structure of China’s economy step by step. In the five year plan, the government included also this issue, especially from a green point of view. Some positive and innovative changes are coming.

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This article is intended solely for informational purposes and does not constitute legal advice. Although the information in this article was obtained from reliable official sources, no guarantee is made with regard to its accuracy and completeness.

Copyright 2016

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