The Chinese housing market is something that is constantly fluctuating.  Recently though there has been a huge spike in the prices of property value in China as a whole but mostly in the large cities. What i’m sure isn’t a shock to anyone is that all of these houses are very new, but what is interesting is the Chinese builders have been making huge cities and buildings for years and no one has been moving into them. So why now is the Chinese housing market doing so well? This led me to thinking if it had anything to do with Porter’s 5 Forces of Industry Attractiveness. The main force that I thought this was affiliated with is Buyer power, because the buyer can directly affect the housing buy either choosing to buy or to not buy. A large portion of people buying housing in China are actually investors and people that aren’t actual permanent residents of the places they are buying. Another issue with people starting to buy these houses at 66% (the amount that the housing market prices have grown recently) higher values is that they might be borrowing to much from the banks which could cause long term financial issues affecting the market as a whole. The reason for this is if a lot of people buy houses at this increased price not only do they need to borrow more for the houses then they would have to previously. But they also would probably have to deal with higher property taxes as more and more people purchase houses and the demand for the property rises. Which feeds into another one of the 5 demands discussed in class “Barriers to entry” a spike in prices along with a spike in taxes would make it a lot harder for less economically sound people to join the housing market. Not only would these people not have as much money but the banks wouldn’t be able to give the people big enough loans to put a down payment on the houses. Eventually the prices will get so high that market will crash which is what happen in the US in third quarter of 2007 and ended in the end off 2008.

Sources:
http://www.economist.com/news/finance-and-economics/21708674-severe-imbalance-land-supply-fuels-chinas-wild-property-market-when-bubble
http://www.wsj.com/articles/china-housing-revival-buffers-economy-1463288631
http://uk.businessinsider.com/chinas-housing-market-is-going-nuts-again-2016-9
http://www.bloomberg.com/news/articles/2016-08-17/there-are-more-signs-that-china-s-property-market-is-cooling-off

(400 words)