Property bubble in China's major cities growing larger

16:27, December 14, 2009      

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The property bubble in Beijing, Shanghai and Shenzhen is growing larger, with the bubble index in Beijing exceeding that in Shanghai, according to statistics released by Midland Reality recently.

Beijing leads China in price-to-rent ratio

The price-to-rent ratio is the ratio of the monthly rents to the residential real estate prices. In general, the ratio is between 1:100 and 1:200.

According to a survey conducted by Midland Reality since Nov., the price-to-rent ratio of Beijing's property has exceeded 1:546, and the figure has even reached 1:546 in some regions in Beijing, increasing 25 percent from 2008 (1:400). There are many reasons for this situation. But In Beijing, average rental prices amounted to about 2,250 yuan in Nov. and saw an increase form Dec. The trading volume of houses continued to rise, mainly because the city has entered a period of growth.

The price-to-rent ration in Shanghai and Shenzhen is 1:500 and 1:450 respectively.

Beijing exceeds Shanghai in investment ratio

Beijing has exceeded Shanghai in investment ratio for the first time. About 62 percent of 200 registered house buyers said they would invest in real estate if they had surplus money, while the figure is 51 percent in Shanghai.

By People's Daily Online
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