Thursday, November 3, 2011

More on the Collapse of the Chinese Real Estate Bubble.

Home prices in China are expected to continue to decline. (Story here).
The government, concerned that the surging property market in recent years could lead to unrest from folk priced out of the market, has brought in measures to tame prices. They include construction of 10 million low-cost housing units this year, limit to purchases of second homes, and curbs on lending.

The measures are slowing sales and encouraging developers to cut prices to maintain cash flows. Real estate prices in the mainland's biggest cities such as Guangzhou may fall 10-15% this quarter, Reuters reported, citing a Citi report of November 1.
The real issue is that China is attempting to curb inflation in order to maintain its price advantage in manufacturing.

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