An Overhaul on China’s Property Market?

September 28, 2006 at 10:45 am (China, Economics)

One day after two officials were fired for land misuse, China’s central government ordered top-level investigations of property markets in a dozen cities and provinces, including three municipalities Beijing, Shanghai, Tianjin, and Liaoning, Inner Mongolia, Jiangsu, Jiangxi, Shandong, Hubei, Guangdong, Sichuan and Shaanxi.

China has released a large amount of regulations and laws to curb the hiking property prices, but few were seriously enforced.

According to some analysts, arbitrage opportunities in large cities are getting slim, and foreign investors are now steering they money to the middle part of China, only if there are good projects.

Overseas capital has been the center of a long-time debate on whether it fueled China’s property prices. According to some reports, abroad investment accounted for a small slice of the whole pie and could hardly drive up the market. But it’s no secret that since China’s capital markets are tightly closed and overseas investors are allowed to play within a very limited sphere, real estate, which is the only sector that is surprisingly open to overseas investors, attracted huge attention. As long as China isolates its investment market from the rest of the world, real estate will continue to be in hot demand.

 

From Associated Press

China Probes Property-Market Dealings

China’s cabinet has ordered top-level investigations of real-estate markets in a dozen Chinese cities and provinces, the government said Thursday.

Teams of officials from the Ministry of Construction and other agencies responsible for overseeing economic policy were being dispatched to Beijing, Shanghai, Tianjin and nine provinces to check if government economic policies are cooling local property markets, the official Xinhua News Agency reported.

The report comes amid a crackdown on the unauthorized use of land for property projects and other construction. The government has ordered a slew of new regulations aimed at curbing speculative buying that is blamed for driving prices beyond the means of many families. “Housing prices in many cities … have defied macro control policies and continued to soar. Some have reported annual rises of 20%,” the Xinhua report said.

It said the cabinet, or State Council, ordered teams from various ministries to Beijing, Tianjian, Liaoning, Inner Mongolia, Jiangsu, Jiangxi, Shandong, Hubei, Guangdong, Sichuan and Shaanxi. Earlier this week, a delegation from the Ministry of Construction inspected the situation in Shanghai, the report said. It gave no details on the delegation’s findings. (more)

Also refer to How Shanghai is cooling the property market

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