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Housing prices in China shoot up

BEIJINGCHINA‘S housing prices rose at their fastest rate yet last month despite government efforts to cool the boom and ensure adequate supplies of homes for the poor, according to data reported yesterday.

 

The sharp gains of 9.5 per cent have inflated assets of Chinese who already own property, helping to produce dozens of new billionaires, but strained the ability of ordinary families to buy homes.

 

‘Housing prices are higher and higher and beyond belief,’ said Ms Zheng Jinping, a 23-year-old employee of a Beijing construction company.

 Ms Zheng said she and her fiance looked for a home this year but gave up when they found nothing affordable. ‘We will wait a year to see whether prices drop. But if they don’t, we will have no choice but to buy. We are getting married and we need a place to live,’ she said.

Last month’s gain was up from September’s 8.9 per cent rise, according to China‘s main planning agency, the National Development and Reform Commission (NDRC). The official Xinhua News Agency said the October rate was the highest on record.

 Rising prices are fuelling a building frenzy, turning Beijing and other Chinese cities into forests of cranes as developers put up new apartments, shopping malls and office towers.

Housing prices in Beijing soared 17.8 per cent, figures showed.

 China‘s leaders worry about the social impact if housing prices rise out of reach for hundreds of millions of Chinese who have been left behind by the country’s boom. Poor families are already struggling with a spike in inflation which saw food prices climb 17.6 per cent last month, compared with the same month last year.

At the same time, the number of mainland Chinese billionaires rose from 15 last year to 66 this year, many on the strength of property investments, according to business magazine Forbes.

Ms Li Ran, a 25-year-old employee of a state company, and her parents are looking for a two-bedroom apartment in Beijing.

 

They have 400,000 yuan (S$78,000) – a substantial sum in China. But even if they borrow another 250,000 yuan, they will have to settle for a place in the distant suburbs beyond the Fifth Ring Road which circles the capital, she said. ‘Incomes keep increasing, but they lag far behind housing prices. Still, people want to buy.’

 

As to whether the government can restrain prices, Ms Li said, ‘I don’t think the situation will change in the next 10 years. The trend is irreversible.’

 

Prices of luxury homes rose fastest last month, climbing 12.3 per cent, the NDRC said on its website, citing a survey of prices in 70 cities. It said prices of low-cost housing rose 3.3 per cent. The highest rate reported was 19.1 per cent in Ningbo, a booming port south of Shanghai in a major exporting region.

Real estate agent Ji Donghai said he has seen the volume of properties changing hands with ease lately, possibly due to the higher prices. ‘Some of my customers choose to rent a place and wait for a while,’ said Mr Ji, who works for the Beijing Di Jia agency. ‘But some other customers still choose to buy. They see the rising price, and they don’t think it is likely to fall.’

 

Source: ASSOCIATED PRESS (The Straits Times 16 Nov 07)

 

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