Chinanews, Beijing, Jan. 30 – Chinese property market has already displayed some bubbles and there are problems existing in nearly all aspects of the industry, says a report released by the Chinese Academy of Social Sciences.
The report, titled "2007 China Service Industry Development", is made by the Chinese Academy of Social Sciences (CASS) and the conclusion is arrived at by its summarizing the situation of property market in China.
The report mainly discusses four points in support of its conclusion.
Firstly, housing prices are too high and have climbed too rapidly. The report says that based on common situations in the world, it is normal that housing price in cities and suburban areas in a country is usually 2.6 times that of people's family income. In China, however, the ratio of housing price to people's family income now generally stands at 7.6:1. In some cities, the ratio can be as high as 10:1.
Secondly, there is an oversupply of houses and an irrational industrial structure in real estate market. At present, the total number of houses available has already exceeded the demand for these houses. There is a high vacancy rate of commercial housing and the vacancy rate is already higher than the world alerting line. Oversupply and shortage problems exist simultaneously in the real estate industry. While many Chinese still do not have their own houses because of the short supply of commercial housing, especially affordable commercial housing, a large number of luxury houses and villas have been built and become vacant. The trend is still going on at present.
Thirdly, profit in the real estate sector is overly high and the sector takes an irrational large proportion in the local economic structure. In China, profit made in real estate sector is much higher than in other sectors, which prompts many Chinese enterprises to shift their business to the real estate industry. In some regions, real estate industry has become the main, or even the only business sector in local economy.
Fourthly, large fluctuations are seen in the economic cycle of the real estate industry. Compared with fluctuations occurring in every economic cycle of the macroeconomy, real estate industry has witnessed much larger fluctuations in its economic cycle.
