China’s property bubble is worse than it looks
By Takatoshi Ito (FT)
Published: March 16 2010 22:43
The Chinese official statistics say that the average rise in property prices was 10.7 per cent in February. The increase is accelerating from a year-on-year rise of 9.5 per cent in January. However, the data may significantly underestimate what is going on for prime properties in China. My friends in Shanghai and Beijing say the rate of price increases of typical housing units is above 50 per cent a year and may reach 100 per cent, and that new property developments are spreading fast from first to second-tier suburbs, with less convenient transportation.
Well, if so, the exchange rate appreciation would pose a risk. Since the real exchange rate is the relative price of non-tratables against tradables, the appreciation would push farther non-tradable price, which would push the property price to the ceiling. I wonder the authorities can tighten enough. Well, well, well.
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