Does China Have a Housing Bubble? Group3 Day5

History-real estate market Hardly 20 years ago China’s real estate market didn’t exist. It wasn’t until the mid-90s that a series of reforms allowed urban residents to own and sell real estate. Prior to people were given the option to purchase their previously government-owned homes

While this represents China’s weakest quarter since the dark days of the financial crisis in early 2009, it is still “a milder deceleration than many had feared until recently,” 

Population

Population Density The most densely populated provinces in the east: Jiangsu: 712 persons/Square km Shandong: 587persons/Square km Henan:546persons/Square km The least densely populated areas are in the west: Tibet Autonomous Region: 2persons/Square km

Value of Investment in Property (RMB)

Just a moment ago, J introduced phenomenon of china now, I will continue introduce relation between those and real-estate the Chinese are to be applauded for saving, about thirty percentage income of Chinese people are saved, beside We want to ask where is their money?

The picture we can look at what they do with their savings The picture we can look at what they do with their savings. The Chinese on average have almost 75% of their wealth invested in real estate. Compared to

Real Estate is expensive Home price to income ratios are high： Beijing is 33.5 times income Shanghai is 30.2 times Shenzen is 30.0 times In the US, by comparison, the home price to income ratio in cities is only about 6 times income on average.  However, the people of China are willing to  buy these extremely expensive properties.

conclusion the consequence is a huge real estate bubble in China. In conclusion, it would not take much of a negative surprise to throw our feeble economic recovery into a recession. If the world’s second largest economy experiences a decline of 50% or more in its real estate market, that will mean a serious financial crisis in China.