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China's housing heating cooling economy long term?


05-18-2016 16:20 BJT

One city in particular is leading China's housing rebound, Suzhou. So, CCTV went to the city in eastern China to find out about long-term trends in the property market. 

Suzhou led the way in land leasing prices in China in April. Suzhou's average home prices surged 54 percent in the month from a year ago.

Overall, average land auction prices for China's second-tier cities surged 65 percent in April from March. That easily beat the 2 percent gain in the country's major metropolises.

"I think for housing developers, they are encouraged by a reviving market to unfreeze more funds for land leases," said Chen Yunfeng, Sec.-Gen.of Nat'l Real Estate Manager Alliance.

China's property prices and sales have risen in recent months thanks to looser lending policies and moderate growth in new construction.

That's easing the burden on China's housing inventory, which is so vast it can fill seven Manhattan islands.

However, at least one developer thinks the spurt could be a short-term buzz.

"Because of the fast increase in home prices, the bar for housing purchases is growing higher too, and the gain in purchasing power among buyers cannot keep up with that. That means the home sales may reduce soon," said Ouyang Jie, vice president of Futureland.

Here's the dilemma. Economists say the government wants to boost the property sector enough to hit its 6.5%-plus growth target for 2016 without making its overcapacity and debt problems much worse.

The economists say the housing market’s contribution to the Chinese economy has been falling in recent years from more than 20 percent to just 15 percent in 2015.

But for this year, those economists say, reducing housing inventories is still the top priority for most developers.

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