Categorized | International

Government Restrictions Slow Pace of Rising Home Prices in China

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Home prices in China saw just a .2 percent rise in July, which is the slowest rate of increase in almost a year. The slowdown, though, was actually initiated by China’s government in an effort to limit house prices in some of the smaller cities. The move is part of wide range of real-estate restrictions to control prices and prevent the growth of an asset bubble.

The continuous growth in price increases in China’s real estate market can be attributed to both inflation and investment. Despite the government’s new restrictions, many lenders believe that prices will continue to rise due to those two factors.

Although the Chinese government is confident that their imposed limitations will benefit the country and stave off any future asset bubble, economists are not so certain that everything will work as planned. In fact, some are saying that with the restrictions being placed on the entire countries, there will be areas that struggle and experience a change for the worse. Others believe that, regardless of any action taken by the Chinese government, the real estate market there is on a path of collapse. These experts believe that in the next two years, prices on Chinese real estate could drop significantly.

In spite of these dire predictions, the current real estate market continues to thrive. Only three Chinese cities did not see an increase in home prices over the last month, and even with some government limitations in place, it would not be entirely surprising to see that trend continue into the foreseeable future.

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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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