12/09/2010

Chinese Property Shares Sink on Overpriced Home Prices

In Asia Thursday China's Shanghai Composite Index lost 1.3% to close at 2,811 and Hong Kong's Hang Seng Index added 0.3% to end the day at 23,172. In Japan the Nikkei 225 Index rose 0.5% to 10,286.

News that a major Chinese think tank, the Chinese Academy of Social Sciences, believes that real estate prices are overpriced to the tune of nearly 30% took the property sector by storm today. The organization released its annual report saying that in five of the 35 cities they investigated, property is selling for more than 50% of what it should be, while homes in another 11 cities are selling for 30% to 50% above their actual value.

According to China Economic Net, this puts home ownership out of reach for about 85% of urban Chinese families since wages just aren't keeping up with the skyrocketing real estate market. This is right in line with what locals are reporting. According to one expat, home prices in her swanky Beijing neighborhood are out of sight, and locals seem to be competing to pay even more to flaunt their wealth.

An analyst with China Real Estate Information Corporation told China Economic Net that, "The central government should maintain its tough stance to curb property speculation over the coming year to help raise buyers' affordability." Lower prices would have a direct impact on developers' profits, and today Poly Real Estate tumbled 4.5%, China Vanke slumped 3.8% and Gemdale fell 2%.

See full article from DailyFinance: http://srph.it/dFjJ4g
Dec 9, 2010 9:42:39 AM | Current Affairs

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