China’s real estate market has grown immensely in the past years and is a key component in the Chinese economy. We’ve seen both ups and downs with a big correction in 2015-2016, during the stock-market crash.To get more China real estate news, you can visit shine news official website.
Currently, China’s economy has slowed down and we see an escalating trade war with the US. So how will this affect the market? In this article, we take a look at how China’s real estate market has performed the past years and what the predictions are for 2020.China’s real estate market is an important driver of the Chinese economy and accounts for 30% of the total GDP. The market is currently one of the fastest-growing markets in the world. As prices have surged since the 2000s, setting foot into the housing market has become popular to gain wealth.
Many of the luxury goods and sports car you see in places like Shanghai (there are a few) is bought with money made from real estate. According to the National Bureau of Statistics, the major cities have seen higher increases in residential house prices. This is mainly the case for first-tier and second-tier cities like Shanghai, Beijing, and Shenzhen. Showing you some interesting data, below you can see a summary of the average real estate prices per square meter from 2013 to 2016, which speaks for itself.Many of us have the impression that Shanghai and Beijing house prices are more expensive.
But the fact is that Shenzhen has outranked these cities with prices growing immensely in the past years. Many people in the West haven’t even heard about this dynamic tech- and financial hub that becomes increasingly important to China as a whole. It’s become one of the major financial hubs, it’s closely tied to Hong Kong, and with favorable policies. It was the first city to open up to the foreign world in 1978, thanks to Deng Xiaoping, and grew with an astonishing rate of 40% per year from 1981 – 1993.The Chinese government has seen the issues with the fast-growing house prices and investors’ love in the real estate market. Therefore, it saw no other choice than to introduce new measures to cool down the market.The main idea behind these changes was to encourage buyers to live in their houses, not simply buying them as investments.
The fact is, many Chinese investors and private households prefer to invest in real estate. According to CNBC, Chinese households put two-thirds of their assets in real estate, while American families put around half of their assets in real estate.Why is this the case? The main reason is that investors in other countries tend to invest more in stocks. Not surprisingly, there’s a reason why Chinese don’t trust their domestic stock market. It’s simply too volatile as individual holders account for 80% of the trade volume in the Shanghai stock market, for example.These individuals often collectively “panic-sell” based on rumors and chase short-term gains. You’ve probably read about the Chinese stock market crash that went on from 2015 to 2016.