Essay about The Chinese Bubble

Chinas housing market has undergone cataclysmic shifts over the last century. The most important one being the move towards a market based housing system, from a welfare based housing system. As China’s economy has boomed the demand for housing has been explosive while the supply of affordable housing has been lacking. In this essay, I plan to discuss the rising cost of housing in China as well as the lack of affordable housing for low income households. In addition, I will talk about why this is a major social problem of significance and what are some possible solutions.

Owner-occupancy in the US peaked at 69.4% in 2004 Q2 and it has subsequently declined to 63.1% in 2016 Q2. There has, therefore, been a significant rise in the size of the US rental market during this period to offset the decline in owner-occupancy. Credit availability collapsed in the aftermath of the financial crisis, thereby forcing many would-be first-time buyers into the rental market or going back to living with their parents. The shift in housing-stock demand towards the rental sector has also had consequences: rent inflation has been rising. The latest 12-month change in rental costs, according to the latest consumer price index report, is +3.8%. Numerous observers, including myself, believe this official

When one thinks about the quality of life in China, people assume that they are thriving due to the booming markets in their big cities. However, most of China is considered rural and conditions are not like that of those in the city. Over the past decade, China has invested time and money into developing their power grids and the development of roads and highways, amongst other things. Their increase in infrastructure has increased the quality of life for everybody involved. Because they are able to hire cheap labor, they have been able to employ hundreds, if not thousands, in order to continue their growth, which makes way for quality of life improvements. According to the Federal Reserve Bank of Atlanta, “China spent 9% of GDP on infrastructure...” (Laurel Graefe). That is a very measurable amount of money!

Many claim the booming as a result of “rich Chinese buyers” which is leading the housing market to a dangerous level where middle-class family will find highly arduous to afford a house.

The first perspective that we will look at is the timing of the housing boom. During this time residential investment moved above the average range and rose substantially towards the end of the year (Dokko, J., Boyle, B., Kiley, M. T., Kim, J., Sherlund, S., Sim, J., & Van den Heuvel, S, 2009). During

Since 2005, average prices in China’s real estate market has been growing rapidly every year. Analysts such as Javers E. and Powell B. (2010) argued over whether this rise was an effect of a speculative real estate bubble, or a real increase in demand. Signal of a bubble could be the big number of empty or uder-performing buildings and the continued construction of property, including an estimated 64 million unoccupied flats (AsiaNews, 9 Aug. 2011). As Xu Shenglan (2009) wrote, there were “high price-to-income ratios for real estate”, such as in Beijing where the ratio is 27 to 1

3. Why did influential individuals like Fisher, Keynes and Rockefeller believe that the downturn would only be temporary?

Why housing price is so high in China, especially in core cities? And why the government didn’t do anything to reduce the price? Because government is the one of the cause of high housing price. In China government own the land, government sell the land to real estate developers at a very high price at the beginning, and then heavily tax real estate industry’s income which from selling the house they built on that land. Real estate industry wants to make profit; therefore, they increase housing price in order to make a better profit from consumer. Additionally, since real estate is a big part of China’s economy and a large portion of government’s tax revenue is coming from the real estate industry; therefore, government does not want housing price to drop. Government does publish some policy to adjust hosing price when it increased too rapidly, and the purpose of government’s adjustment is not to decrease the housing price, but to slow the speed of increasing.

China has been growing a lot in the past few years, and most of the products we use in our everyday life are imported from China and their manufacturers. One very common product most of us use is the iPhone and as you may, or may not know, the U.S. manufactures this product in China.Why you may ask? Manufacturing an iPhone in the United States would cost about $65 more than

Real estate is a cyclical industry, it will be effected by interest rates, population growth, and economic strength, etc.

The People 's Republic of China has had one of the wildest real estate sectors of any large-scale global economy. Chinese real estate value have been appreciating dramatically and at least abroad in the United States, media outlets have been covering this topic in an extremely sensationalistic way reporting "ghost cities," and "real-estate bubbles" at their bursting point.

The most populous country in the world is constructing houses, districts, and cities with no one in them. Ghost cities is probably the wrong word to describe these unoccupied cities. Since Ghost cities/towns typically mean people have completely abandon the city/town. These cities have yet to be lived in. Many people in the financial world are nervously looking at China. They are building 12-24 new cities each year. The concept they have is to build now and sell later. The assumption is if you built it they come, but no one is coming. Other city housing markets follow the supply and demand rule, but in China the prices stay high. Kenneth Rapoza (2015) stated in the Forbes article, “Anyone can build a useless overpass, but it takes China to build a city for a million people with no buyers in sight.”

An expensive, but effective way of entering the lucrative Chinese buying real estate market is to exhibit properties at real estate trade shows in China, that’s why many international real estate companies come to China to participate in real estate exhibitions

The Communist party in China has, for decades insisted that peasants, even those working in cities, remain tied to their tiny plots of land to ensure political and economic stability. (Johnson,2014) However, China’s new policy is now to urbanize most of China as a way of mass modernization and they are doing so, through the creation of new cities and massive relocation. Due to the large amount of funds needed to create new cities, China’s government has created a series of development strategies that is meant to bring in people both investors and residents alike because they need the money from the investors and the land from the people.

Sydney had an obvious ascent of 13.9% in residential property prices whilst Melbourne had 9.6% increases in that of prices throughout a year (ABS 2015b). Melbourne has a steadier residential market compared to Sydney, albeit Melbourne is situated on second, it did not experience falling in housing prices during September 2015 to December 2015 (ABS 2015b). Sydney had an overall immense increment from 2014 to 2015 due to growth on June and September (ABS 2015b). Australian Bureau Statistic (2015a) has ranked Chinese as third largest migrants in Australia and first largest from Asian countries. Recently, Chinese has been broadly discussed by news media regarding the foreign investment in Australia’s residential property (FIRP) (BBC news 2016). Thus, it is significant to identify the driving force for Chinese investing in Australia’s residential property market.