Chinese buyers unfazed by restrictions aimed at taming housing market

Prices rose 9.7% in 70 Chinese cities

New York /
Jul.July 13, 2017 05:35 PM

“It’s the crazy thing about people. The more you say no, the more they want in on something.”

When Christian Bale’s character in “American Hustle” said this he wasn’t talking about China’s housing market — but he could’ve been. As the Chinese government tries to tame a frenzy of home purchases — through a series of policies, such as by raising mortgage rates, limiting apartment ownership and upping down payments required on second homes — droves of speculative buyers continue to scoop up apartments.

The result is rapidly climbing prices and extensive borrowing, the Wall Street Journal reported. Prices in 70 Chinese cities rose 9.7 percent in May from the same time last year. Officials are concerned that the property bubble could set off a series of foreclosures once it bursts. At the same time, they don’t want to go too far in slowing investments.

“Lessons from Japan and the U.S. told us that there is no such thing as an ever-rising market,” Li Xunlei, chief economist at Chinese brokerage Zhongtai Securities, told the Journal.

Still, China isn’t quite in the same place as the U.S. was in the lead up to the financial crisis about a decade ago. Banks in China don’t offer risky mortgages and are limited in their abilities sell off loans as securities. Buyers are also confident that the government won’t allow the market to collapse.

According to Moody’s, real estate accounted for 68.8 percent of China’s household assets at the end of 2016. [WSJ] — Kathryn Brenzel 


Related Articles

arrow_forward_ios
(Illustration by The Real Deal)
Americans bought 5.6M homes last year — the most since the bubble
Americans bought 5.6M homes last year — the most since the bubble
Randy Mastro and 21 East 83rd Street (Photos via Getty; Google Maps)
Former deputy mayor Randy Mastro, lawyer in Lucerne controversy, lists UES home
Former deputy mayor Randy Mastro, lawyer in Lucerne controversy, lists UES home
Overall, the number of housing units that started construction last year was up 7 percent from 2019. (iStock)
Residential construction had busiest year since 2006: MBA
Residential construction had busiest year since 2006: MBA
Common Projects sneaker designer Peter Poopat bought the home in December. (Getty, Brown Harris Stevens)
$6.5M Fort Greene townhouse sale breaks neighborhood record
$6.5M Fort Greene townhouse sale breaks neighborhood record
(iStock)
Homebuilder sentiment falls for second month in a row
Homebuilder sentiment falls for second month in a row
(iStock)
Homebuying up again, but rising mortgage rates depress refinancing
Homebuying up again, but rising mortgage rates depress refinancing
The two most expensive contracts signed last week were condos at One Prospect Park West. (Douglas Elliman)
Brooklyn luxury market roars back to life
Brooklyn luxury market roars back to life
Fidelity’s Raymond Quirk (iStock)
Title insurers launch new closing tools as homebuying rises
Title insurers launch new closing tools as homebuying rises
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...