China sees spike in real estate bubble

Property prices in urban areas in China have soared on the back of sustained investment from overseas, it has been claimed. The Institute of Finance and Trade Economics under the Chinese Academy of Social Sciences (CASS), constructed a property bubble index designed to measure market prices compared to the actual value of a property....

Property prices in urban areas in China have soared on the back of sustained investment from overseas, it has been claimed.

The Institute of Finance and Trade Economics under the Chinese Academy of Social Sciences (CASS), constructed a property bubble index designed to measure market prices compared to the actual value of a property.

It found that in seven cities, the bubble index is more than half of the market price, China's People's Daily reports.

Fuzhou, capital of China's Fujian province, saw the biggest gap between market price and actual value, the survey found.

The actual value of commercial housing in Fuzhou is only CNY 3,998 per square meter, while the market price is CNY 13,457.

Among the 35 cities included in the report, the average bubble was found to be 29.5 per cent.

It follows a recent report from the Ministry of Commerce that an increasing number of foreign institutional investors are entering China's property market, attracted by the sector's high investment returns and the country's solid economic fundamentals.

- Friday 10 December 2010

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