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Property marauders!
By Zhou Yan (China Daily)
Updated: 2008-06-30 15:50 Before Wenzhou "property marauder" groups were suspended in 2005 due to intervention by the local government, at least 10 other groups, about 3,000 people were organized to visit mainland cities as well as Hong Kong, Macao, Singapore, even as far as Australia. According to National Business Daily reports, Wenzhou housing investor group arrived at Fuzhou, the capital city of Fujian province in 2003 and "occupied" the city until 2006. At the time Fuzhou took the lead as having the highest housing price growth in China. "The majority of its houses are double their original price. Some have risen 150 percent," reported National Business Daily. In the report, a man identified only as "Mr Zhu", a Fuzhou local, recalled that he bought his three-bedroom house for 2,000-yuan a sq m in 2003. A year later when the Wenzhou invasion became the major market force, the price of the second phase of the real estate development had jumped to 2,700-yuan a sq m. National Business Daily reported that according to a staff working for Century 21 Real Estate, Wenzhou natives bought over 40 percent of all the first-hand properties in Fuzhou in 2004 alone. In 2004, Horizon Research, a Beijing-based professional research and consultancy firm, released a report demonstrating that most of China's newly-emerging "well-offs", which account for 5 percent of then urban population, opted to invest in the real estate industry as their first financing choice. A "well-off" is defined as someone with an annual income of at least 200,000 yuan. Outcry Soon, the super-heated investment forced real estate prices out of the hands of average citizens, and resulted in a national backlash against housing speculators. And Wenzhou investors, thanks to the media's exposure, bore the brunt of the fury. Analysts and economic experts turned to the government for reactions to the sky-high real estate. Yin Zhongli, deputy director of Financial Markets Office in Chinese Academy of Social Sciences, published a widely referenced article in Guandong's Southern Weekend newspaper on March 18, 2004, calling for government action against the rampant speculation. "Wenzhou Chao Fang Group is inevitably linked to the sky-high properties. However, what's more crucial behind the irrational housing market, is that the government lacks effective macro-adjustment measures to curb the investment upsurge," Yin explains the reason why he wrote the story in 2004 . The outcry was finally heard by the central government. The turning point took place in 2005 when eight measures to regulate and adjust the property market were released by the State Council. They included higher taxes and a more restricted land supply. Minimum down payments for home buyers were also set at 30 percent of the total price from the previous 20 percent. Housing speculation dropped after the restraint policies were put into force and given the uncertainty of the industry and the probability of a future real estate recession, another investment surge for Wenzhou people is unlikely to happen again, Ma says. (For more biz stories, please visit Industries)
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