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China Briefings

Reports on China issued by Samsung Economic Research Institute

Bubble on China's Property Market

Bubble on China's Property Market

Samsung Economic Research Institute Beijing Office

July 27, 2006

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China's real estate market has experienced a torrid growth since 2000 as it is awash with enormous sum of investment funds for the years. Investment in real estate development accounts for around 20% of that in fixed assets whose annual growth rate has averaged 20-30% since 2000. Despite temporary let-up from government measures in 2004 to rein in the overheating market, the market still has grown over 20% a year.

Before 2004, new housing starts and the areas under construction had kept rising quickly, due to cheap financing and massive investment inflows looking for high returns. A new round of housing price upsurges observed at the end of 2005 is showing no signs of abating. In addition, government control on macro level has not worked in relieving the skyrocketing price trend.

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