China's property bubble has grown so huge that 85pc of Chinese living in cities can no longer afford to buy a home, according to an influential Chinese government think tank.
The Chinese Academy of Social Sciences (CASS) said in its annual Economic Blue Paper that a typical Chinese property now costs 8.8 years of average earnings.
In addition, CASS said that house prices are still rising far in excess of wages, putting property more and more beyond the reach of average Chinese.
CASS estimated that Chinese property prices had risen by 15pc this year, although the rises in some cities have been far steeper.
By contrast, the UK's typical house costs five years of wages to buy, according to the Nationwide Building Society, and the UK's long-term average is four years of earnings.
"House prices have risen steadily for years," said Zhou Linhua, the co-author of the CASS report. "This has inflated investor expectations of a high return, which has brought more money flooding into the market, and fed the bubble."
The Chinese government has repeatedly tried to cool the soaring property market this year, raising deposit requirements, increasing mortgage costs and curbing loans for second homes.
The People's Bank of China, the country's central bank, told lenders to raise the minimum reserves they hold in proportion to deposits by half a percentage point, in an attempt to rein in lending and cool inflationary pressures.
Read more at The Telegraph
Recent Comments