China getting costlier on demand side?

As a after effect of global business slow down home prices in China have climbed 60 percent since 2008 forcing the government to launch a $645 billion stimulus program to counter the effects of the global financial crisis. As per real estate blog Since 2010, government bodies are trying to control this rise in prises by imposing higher down-payment requirements, raising interest rates on loans for second-home purchases, and increasing construction of low-cost housing. Non bank money lenders were also put on check to the upheaval.

Shocking Figures

About 67 percent of housing under construction in China last year was in less affluent cities such as Fenghua, according to Nomura Holdings (NMR). About 120 miles south of Shanghai, with a population of 500,000.  The city is filled with pawn shops, textile and garment factories, and empty residential buildings.

Whereas the experts say that the urban income growth in China has outstripped the rise in home prices in the past eight years. Also, Chinese buyers pay for homes either in cash or with significant down payments. What has changed is that the Chinese government is more willing to let private companies fail, and “that is a good thing,” he says. “If you are going to have creative destruction, some companies are going to have to go out of business.”

Investment happening Abroad
Chinese retail and institutional investors are targeting the developed countries as they not only see market but the prices of land is soaring like jet sky at home. Population pressure and easy investment process abroad has oozed the demand of cross over real estate in vestment in china . according to an article in Reuters, last year itself a total of $11.5 billion was invested in overseas property. After China’s richest man made a bid to buy historic Madrid skyscraper, its now American online property site Zillow Inc. which entered into the partnership with Chinese real estate portal Beijing Yisheng Leju Information Services (Leju) to cater the oozing demand of Chinese investment in American real estate industry.