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From the Market: Construction and Real Estate

From the Market: Construction and Real Estate
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China’s mecurial housing market remains a concern, but at a recent BritCham and CBBC event Ms Qian Lu, Senior Econometrician from the Economist Intelligence Unit made a compelling argument in favour of sustainability. Backed by the Access China programme, Qian sees not a bubble but a boom, stating that China’s housing growth will continue to benefit from the country’s savings culture, rising incomes, urbanization and most importantly favourable government policies.

Consider this: September’s now infamous house price decline was in fact a miniscule drop. According to China Real Estate System data, prices in 100 major national cities slipped a modest 0.03 per cent from the previous month. Cities such as Chongqing, Tianjin, Chengdu, Shanghai, Hangzhou and Shenzhen recorded only a small monthly decline.

Still, others remain concerned. Developers in most first- and second-tier cities have seen sluggish housing sales, even during “Golden Week”, normally the peak home-selling season. These same developers face increased pressure as the government implements measures to make homes more affordable and head off potential social instability.

Despite this, property construction growth remains strong thanks to the increased building of affordable social housing. At the end of August, authorities had begun construction on 86 per cent of the ten million units they had promised to start in 2011. The central government encourages commercial banks to support these housing projects though low loan rates.

For more information, please visit http://www.britishchamber.cn/content/construction-real-estate


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