Q1 home sales in Beijing, Shanghai, Guangzhou and Shenzhen\u00a0dropped more than 40%\u00a0this year from the same quarter in 2013.<\/p>\n

Real estate is a huge driver of China\u2019s GDP growth.Housing market contributes 33% of fixed-asset investment, equivalent of 16% of GDP. The decade-long housing boom has so far defied the bubble warnings, which began\u00a0as far back as in 2007.<\/p>\n

Is China\u2019s housing bubble real? That depends on whether China\u2019s surging housing prices are backed by speculation or a real lack of supply.<\/p>\n

China has\u00a0more than\u00a0160 cities with more than one million people and many hundreds\u00a0the size of San Francisco.China added\u00a0787 million square meters\u00a0of new residential floor space in 2013.\u00a0There has been excessive buildout\u2014that means the current supply is sufficient.<\/p>\n

However, before 2000, affordable properties were in massive construction to be sold to poor\u00a0and middle-class families. Those flats are small and often share kitchens or bathrooms with the entire floor. And these houses are mainly in downtown, thus convenient for people to commute.\u00a0Families, counting on them to save money for fancier and bigger flats, find them unable to sell and waiting to be bought out by developers when the land parcel sells.\u00a0At the end of 2011, around 47% of China\u2019s overall housing is such \u201ccrappy legacy housing.\u201d Experts estimated only around one-third of home owners are living in \u201ccommodity houses\u201d\u2014while others hang on social or legacy housing. That means China might actually have a housing shortage.<\/p>\n

What\u2019s more, China\u2019s household registration system limits who can buy property where, distorting potential demand and supply balance.<\/p>\n

However, some argue that with building around 13.4% more floorspace each year, China finally has too much housing. For each person that moves to a city this year, developers will build around 121 square meters of new flooring. That number was 113 last year.<\/p>\n

People, especially those in first-tier cities\u2014Beijing, Shanghai, Guangzhou and Shenzhen, buy property in the big metropolises as investments.<\/p>\n

But the first-tier cities\u2019 account for only 5% of housing under construction and sales\u2014and only 8% of overall housing investment in 2013. This is comparable to US property bubble burst when property prices did not collapse in New York, but instead in places like Orlando and Las Vegas. In China, the true risks property market might actually lie in third- and fourth-tier cities.<\/p>\n","protected":false},"excerpt":{"rendered":"

Q1 home sales in Beijing, Shanghai, Guangzhou and Shenzhen\u00a0dropped more than 40%\u00a0this year from the same quarter in 2013. Real estate is a huge driver of China\u2019s GDP growth.Housing market contributes 33% of fixed-asset investment, equivalent of 16% of GDP. The decade-long housing boom has so far defied the bubble warnings, which began\u00a0as far back […]<\/p>\n","protected":false},"author":595,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/posts\/363"}],"collection":[{"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/users\/595"}],"replies":[{"embeddable":true,"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/comments?post=363"}],"version-history":[{"count":0,"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/posts\/363\/revisions"}],"wp:attachment":[{"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/media?parent=363"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/categories?post=363"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/j469.ascjclass.org\/wp-json\/wp\/v2\/tags?post=363"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}