http://www.bloomberg.com/news/2011-06-28/shilling-why-china-is-heading-for-a-hard-landing-pt-3.html
Inflation worries start with housing. With Chinese exports curtailed by U.S. consumer retrenchment, capital spendingthreatened by government restraints and excess capacity, and domestic spending less than robust, housing has been China’s big generator of economic growth in recent years. By some estimates, half of Chinese GDP is linked to real-estate activity.
Buyers must now put down 60 percent of the purchase price on second homes, and 30 percent on first homes. The government is pressing banks to contain mortgages, and some have raised interest rates. In January, the mayor ofShanghai announced a new tax on property transactions that may be copied nationwide as other officials attempt to cool prices.
Houses are now being built at about twice the rate they’re being sold, well above earlier norms.
Inflation worries start with housing. With Chinese exports curtailed by U.S. consumer retrenchment, capital spendingthreatened by government restraints and excess capacity, and domestic spending less than robust, housing has been China’s big generator of economic growth in recent years. By some estimates, half of Chinese GDP is linked to real-estate activity.
Buyers must now put down 60 percent of the purchase price on second homes, and 30 percent on first homes. The government is pressing banks to contain mortgages, and some have raised interest rates. In January, the mayor ofShanghai announced a new tax on property transactions that may be copied nationwide as other officials attempt to cool prices.
Houses are now being built at about twice the rate they’re being sold, well above earlier norms.
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