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85pc of urban Chinese cannot afford to buy a home as inflation accelerates
The Telegraph. uk
21 Dec 2010
China's property bubble has grown so huge that 85pc of Chinese living in cities can no longer afford to buy a home, according to an influential Chinese government think tank.
The Chinese Academy of Social Sciences (CASS) said in its annual Economic Blue Paper that a typical Chinese property now costs 8.8 years of average earnings.
In addition, CASS said that house prices are still rising far in excess of wages, putting property more and more beyond the reach of average Chinese.
CASS estimated that Chinese property prices had risen by 15pc this year, although the rises in some cities have been far steeper.
By contrast, the UK's typical house costs five years of wages to buy, according to the Nationwide Building Society, and the UK's long-term average is four years of earnings.
"House prices have risen steadily for years," said Zhou Linhua, the co-author of the CASS report. "This has inflated investor expectations of a high return, which has brought more money flooding into the market, and fed the bubble."
Attempting to quantify the size of the property bubble, CASS calculated what it believed was a "real" house price in 35 large and medium-sized cities in September, using an index of eleven statistics, including per capita disposable income, saving deposits, number of doctors and university students, retail sales volumes and local capital investment levels.
According to its figures, new homes in seven out of the 35 cities were more than 50pc over their fair value. Property prices in Fuzhou are 70pc too expensive, while those in Hangzhou are 66pc overpriced. New homes in Shanghai are 37pc overpriced and those in Beijing are almost 50pc overpriced.
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The Telegraph. uk
21 Dec 2010
China's property bubble has grown so huge that 85pc of Chinese living in cities can no longer afford to buy a home, according to an influential Chinese government think tank.
The Chinese Academy of Social Sciences (CASS) said in its annual Economic Blue Paper that a typical Chinese property now costs 8.8 years of average earnings.
In addition, CASS said that house prices are still rising far in excess of wages, putting property more and more beyond the reach of average Chinese.
CASS estimated that Chinese property prices had risen by 15pc this year, although the rises in some cities have been far steeper.
By contrast, the UK's typical house costs five years of wages to buy, according to the Nationwide Building Society, and the UK's long-term average is four years of earnings.
"House prices have risen steadily for years," said Zhou Linhua, the co-author of the CASS report. "This has inflated investor expectations of a high return, which has brought more money flooding into the market, and fed the bubble."
Attempting to quantify the size of the property bubble, CASS calculated what it believed was a "real" house price in 35 large and medium-sized cities in September, using an index of eleven statistics, including per capita disposable income, saving deposits, number of doctors and university students, retail sales volumes and local capital investment levels.
According to its figures, new homes in seven out of the 35 cities were more than 50pc over their fair value. Property prices in Fuzhou are 70pc too expensive, while those in Hangzhou are 66pc overpriced. New homes in Shanghai are 37pc overpriced and those in Beijing are almost 50pc overpriced.
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