Despite Growth, 85% of Chinese Households Cannot Afford to Buy Real Estate

Despite Growth, 85% of Chinese Households Cannot Afford to Buy Real Estate

Residential News » Residential Real Estate Edition | By Michael Gerrity | March 8, 2010 11:46 AM ET

(BEIJING, CHINA) - The Chinese government is planning to increase the national GDP this year through the development of the domestic real estate market, suggests a new study conducted by the analysts of the Russian-Chinese consulting Agency Optim Consult.

According to Optim, this is one of the main reasons for recent price hikes the Chinese residential real estate, observed earlier this year and at the end of 2009.

Rising home prices in China during the second half of 2009 came as a surprise to many experts. According to the December real estate figures, home prices in 70 large and medium cities of China increased by 7.8% compared to the same period in 2008.

The top five Chinese cities with the most intensive price hikes are Guangzhou (19.9%), Jinhua (14.9%), Shenzhen (14.3%), Haikou (13.4%) and Beijing (+ 13.2%). Only in Tangshan did housing prices fall by 2%.

At the same time, prices for office buildings in China increased by an average of 6.4% compared to December 2008, while business centers increased by 2.7%.

"This is just the beginning, this year prices for the Chinese real estate will grow by another 10-13%," - says Eugene Kolesov, CEO of Optim Consult.

"And in 2009 nearly 85% of the Chinese households could not afford to buy real estate, now this goal will become even more unattainable for the majority of them", added the Kolesov.

However despite this, the Chinese Government will continue to actively promote the development of the real estate market as the main growth driver of the national GDP.

Yao Inyuan, Head of Economics Department of the National Bureau of Statistics of China agrees with the Russian expert: "The development of the real estate market will stimulate the recovery of such industries as steel, textiles, construction materials, household appliances and many others. Of course, this is impossible without growth in real estate prices," - commented Yao Inyuan.

According to official data released by the China's National Bureau of Statistics, in 2009 more than $532.8 billion were invested in the Chinese real estate industry, which is 16.1% more than in 2008. The total construction area has increased by 12.8% to 3.2 million sq. m. The volume of sales increased by 75.5% to $647 billion.

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