The Price Of A Property In China Skyrockets
The price of owning a property in China has increased rapidly in the recent months. In September this year, the price of an average property increased to about 11% in the major cities in China. This was according to National Bureau of Statistics in China. Meanwhile, in the province of China in Hefei the capital of Anhi, the price of property increased to about 47% and same was the case in Beijing which increased to 28%.
Estate agents in Beijing say that most of the desired area’s prices have doubled. Most of them have said it has become a thing of concern because the situation is worrisome.
China’s Government is currently attempting to help new homeowners achieve their dream of owning a property. They have also introduced a lot of restrictions to curb the challenges that most wannabe homeowner encounter.
One of the measures that were introduced by the Government is that first time buyers have to pay at least 30% deposit while second-time buyers would have to pay 50%. These rules have also being introduced in other major cities.
A new home owner Mr. Ren said he paid 10 times the amount he ought to pay for the apartment he bought. He believes that the reason for this is simply because they are so many speculators. Close to the apartment where he bought his property, he said about 17 buyers bought homes as investments and they don’t leave them.
Policy makers and economist are worried that the situation is getting out of hand. They are worried that the financial implication may not be favorable to the growth of the economy. Most of the developers borrowed the money they used to build the property while the purchasers are obtaining loans to buy the property.
The chief executive of a multinational company Eric Schmidt said this was the same situation that built up to the US found themselves in 2008. He further said that the Government is trying to ensure that people can obtain loans to buy homes and this also increased the debt levels. According to him, the GDP levels are not impressive.
Presently, China’s debt is about 250% of the GDP – this figure is two and half times the volume of the economic output.
Taking loans might aid in the economic growth however it could also end up storing trouble if the situation is not handled appropriately. Companies in China are given the approval by their governments to swap loans for a stake in their companies so as to minimise the burden of their debt.
The research notes released by some international banks have shown indication that China’s debt-fueled boom could possibly reach to an end in 2017. China’s government is currently aware of these challenges according to Xu Hongcai, an economic adviser to the government.
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