Shanghai Worries About Real Estate Bubble

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Last updated at: (Beijing Time) Sunday, August 18, 2002

Shanghai Worries About Real Estate Bubble

A worry that active buying and selling in Shanghai's real estate market may be a bubble, was expressed in a recent report in China's financial and industrial center.

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A worry that active buying and selling in Shanghai's real estate market may be a bubble, was expressed in a recent report in China's financial and industrial center.

Research by the Shanghai Academy of Social Sciences says investment in real estate increased by more than 50 percent in the first six months of this year but most of the newly-built houses and buildings were expensive.

A downtown apartment cost at least one million yuan (about 120,900 U.S. dollars), too high for a city where each resident had an annual average disposable income of about 10,000 yuan (1,209 U.S. dollars), the report said.

Although expensive houses sold well in the first half year, only 30 percent of the buyers were local residents. Experts were worried the supply might exceed demand in the future without strong support from local consumers.

The report also showed that about 20 percent of people bought a house as an investment instead of a residence; some bought more than one apartment but most of the money came from loans.

Land prices here have doubled in the past seven months and little land is left available in the city's suburbs. As real estate companies from around the country rush to the city, land prices were being pushed higher.

Experts suggested the government limit house buying for investment purposes in a bid to reduce the risk to the real estate

market and keep spare land for housing for ordinary people.

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