Chinese property
China’s bubbly property markets have not burst. Yet
Jun 16th 2011 | HONG KONG | from the print edition
BUBBLES are supposed to burst with an audible pop. But in the snap and crackle of the Chinese housing market, it is hard to hear anything clearly. On June 9th the Wall Street Journal put its ear to the ground and declared that “the great property bubble of China may be popping”. It pointed out that prices had fallen by 4.9% in the year to April in nine big cities tracked by Rosealea Yao of GaveKal Dragonomics, a consultancy. Ms Yao herself thinks a “correction” in the next six months is inevitable. But she argues that it is still “a bit early to say the bubble is bursting”.
Official figures released on June 14th added more noise. They suggested that builders started work on 19% more residential floorspace in May, compared with a year earlier, and sold 18% more. But the sales figures were flattered by comparison with May 2010, an unusually slow month following a government clampdown on speculative homebuying a few weeks before. And the starts figures may have picked up the government’s drive to build more affordable housing.
In other countries, such as America, economists can rely on clear signals from credible price indices. In China the National Bureau of Statistics used to publish a price index spanning 70 cities. But that measure muted both the highs and lows of China’s housing market. It suggested that prices for new and existing homes never fell by more than 1.3% during the financial crisis, and never rose by more than 12.8% a year in the boom that followed. That was hard to square with the head-splitting prices homebuyers were paying in the big cities. People stopped paying attention to the national index. In December the government ceased publishing it.
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