50% housing bubble looms over 7 major Chinese cities

14:21, December 09, 2010      

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Chinese Academy of Social Sciences issued "Housing Green Paper: China Housing Development Report (2010-2011)" on Dec. 8. The report shows that housing bubbles in China's larger cities are relatively big, and the housing bubble in some cities is too large.

The survey, covering 35 large and middle cities, was conducted in September by the Institute of Finance and Trade Economics under the Chinese Academy of Social Sciences (CASS).

Tracking the price of new homes in non-prime locations in 35 large and medium-sized cities in September, the academy found that new properties in Fuzhou, Fujian Province, were the most overpriced with a "price-bubble index" of 0.703, followed by Hangzhou in Zhejiang Province and Nanning in the Guangxi Zhuang Autonomous Region, at 0.669 and 0.668 each.

The bubble index was designed to take into account 11 sub-indexes, including public infrastructure and facilities, and average per capita disposable income.

First-tier cities, such as Beijing, Shanghai and Shenzhen, are among 11 cities where bubble indexes account for 30 to 50 percent of the market price, it said. Eight cities have a bubble indexes from 10 to 30 percent, and the index in nine cities are below 10 percent.

The report said the average bubble among the 35 cities is 29.5 percent, and there is little or no bubble in Taiyuan, Hohhot, Shenyang, Xiamen, Haikou, Yinchuan and Urumqi.

The annual report said the rapid rate of housing price rises in China will slow next year after the government took tough measures to cool the market.

(Editor:黄蓓蓓)

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