Categorized | International

China’s Government Warns of Chaos if Property Restrictions Are Eased

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China’s Premier, Wen Jiabao, stated last week that China’s real estate market could fall into a state of chaos if the controversial property restrictions are eased. The government has been facing a great deal of pressure from local governments and real estate developers to either eliminate, or drastically reduce the restrictions that are currently in place.

 

The Chinese government, however, believes that housing prices are still too high in the current market. By failing to engage in corrective measures, they believe that the market will form a bubble that, when it bursts, could be far worse than that which has crippled the United States. While they are currently facing a bit of negative pressure from property developers, the Chinese national government believes that the current measures will be better for the country in the long term.

 

The government has planned to enact a new nationwide property tax that would replace some of the current restrictions in place on multiple home purchases, though it has faced great resistance from the nation’s wealthiest individuals. That resistance has caused the government to delay the new property tax until further notice.

 

The Chinese Premier has called for more people to consider renting instead of buying a home. He has stated that, while everybody should have a place to live, not everybody should own a home.

 

Economists around the world have estimated that the Chinese market could fall as much as ten to twenty percent in the next year. While that drop in pricing may help the country to avoid a housing bubble, it has certainly had negative effects on local governments in China.

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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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