Tags: china | real estate | bubble | deflate | eliminate

Experts: China Can't Pop Real Estate Bubble

By    |   Tuesday, 22 Dec 2009 01:58 PM

The steps China has taken to eliminate the country’s real estate bubble amount to little more than noise so far, experts say.

Premier Wen Jiabao acknowledged in November that property speculation must be curbed. The government then reinstated a sales tax on homes sold within five years of purchase. The period had been cut to two years in January.

Lu Qiling, an analyst at Shanghai Uwin Real Estate Information Services, says the move will have little impact.

“It’s only a token measure,” he told Bloomberg. “It won’t change the upward trend in housing prices.”

The government’s fear that economic growth may sag trumps its concern about rising real estate prices, says Clement Luk, an analyst at Centaline Property Agency in Shanghai.

“The government is clearly in a dilemma,” he told Bloomberg.

“It wants to address the surging property prices and concerns on bubble-bursting, yet it dares not take drastic measures for fear of hitting the market too hard.”

Andy Xie, former chief Asian economist for Morgan Stanley, says it’s more than real estate at risk. “China’s asset markets are a Ponzi scheme,” he told Bloomberg.

Others agree.

“The government needs to realize how serious the asset bubble is," Zhang Xin, chief executive officer of SOHO China, one of the country’s major developers, told Reuters.

"It cannot control the asset bubble by just saying a few words. The most fundamental solution is to tighten credit."

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The steps China has taken to eliminate the country s real estate bubble amount to little more than noise so far, experts say. Premier Wen Jiabao acknowledged in November that property speculation must be curbed. The government then reinstated a sales tax on homes sold...
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2009-58-22
Tuesday, 22 Dec 2009 01:58 PM
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