Categorized | International

China Real Estate Bubble May Still Be Forming Despite Government Actions

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Over the last year, the Chinese government has placed severe restrictions on both housing sales and real estate lending with the intentions of avoiding a real estate bubble similar to that, which has decimated the United States. While their actions have thus far been successful in preventing unsustainable price growth in the majority of the major cities, there is still concern among many real estate analysts.

China’s government has essentially lauded its own efforts in effectively preventing a residential real estate bubble. However, real estate experts around the world worry that the government may be celebrating a bit too soon. While prices have stagnated in some Chinese cities, they have also grown substantially in others. Analysts believe that the lack of savings options available to the Chinese people continue to push them into real estate investing. As such, prices continue to increase despite all of the measures put in place by the government.

While the analysts have not gone so far as to say that there is definitely a real estate bubble that is forming in China, they are not ruling out the possibility that one may form in the near future. Residential real estate investment continues to remain one of the most attractive investment options for most Chinese citizens, as the market continues to experience growth.

With limited alternative investment options, and the belief that the real estate market will provide guaranteed positive returns, overall housing values continue to inflate despite the measures in place to prevent such increases. Unless the Chinese government offers an alternative savings option, the growth will likely continue in at least part of the country.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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