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How property market frenzy can be curbed

By Louis Kuijs | China Daily | Updated: 2016-09-22 08:12

Housing starts are rising again, responding to an earlier rise in housing sales that also increased housing prices. The renewed enthusiasm in real estate has been key in supporting GDP growth and heavy industry sectors such as steel.

But the recovery has been uneven, with signs of a price bubble emerging in some, mostly large, cities while inventories remain high in others. Property prices in tier-one cities and some tier-two cities have risen sharply since early 2015.

In Shenzhen and Shanghai, they were on average about 38 percent higher in August than a year ago - in Shenzhen the year-on-year increase had even reached 67 percent earlier in 2016, before the local government took measures to restrict housing purchases. Shanghai has also taken such measures, as did several other cities. But it seems that, in response to such restrictions, the rally has spread to other cities close by. The rally has also spread to the land market, with prices at auctions breaking new records.

How property market frenzy can be curbed

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