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Bubble likely to accumulate in property market
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15:52, July 13, 2009

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At present, it is likely that China's inflation pressure will not be reflected in commodity prices, but in prices of assets, especially housing prices will, Xia Bin, director-general of the Institute of Finance at the Development Research Center of State Council, recently told People's Daily.

In light of the current pricing trend in the real estate market, a bubble has started to accumulate due to transactions closed based on a forecast of rising prices rather than a forecast of future returns or actual demand.

Stimulated by a series of stimulus policies, the over-restricted housing demand of 2008 recovered rapidly in 2009. However, various signs since May showed that to some extent, the fast-growing demand is driven by value preservation or speculation. International capital has also flocked into China's housing market because of a sufficient fluidity worldwide.

Judging from cases in foreign countries, those who consider the property market an investment market and a main source for residents' assets have generally experienced the property bubble.

By People's Daily Online

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