Prices of property are rising like crazy in China – so much so that a lot of bankers and investors (not to mention the Chinese government) are worrying about the next real estate bubble occurring there.
Because of this rise in housing prices, capital flows in China will now be monitored to stop any speculative funds from overseas from jeopardizing its property market. Plus, any Chinese family looking to buy a second home needs to make down payments of a minimum of 40%.
Investors have already seen a lot of regular warning signs starting to show. Due to low rates of interest, prices in both Beijing and Shanghai have already gone up twice and it seems that they will go even higher from here on out.
Several bankers and economists have pointed out that most real estate bubbles have crashed and resulted in slow recoveries and battered banks. Since China is a primary factor in global growth, however, a burst in their bubble could be one that affects the entire world.
But a lot of economists are optimistic and believe that the bubble will not break due to China’s strong buying power. Plus, China has quick economic growth, increasing family incomes, more city migration, and banking systems unaffected by residential mortgages.
There are still chances of a pop, though, and this could lead to Chinese construction slowing down and sending lots of people into unemployment. However, predictions state that this will not happen in China until urbanization slows down after more than a decade.
Alex Aguilar
Team Aguilar Real Estate Agent & Blogger!
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