It seems that housing price in China will skyrocketing forever. Every year, the price will be raised from 10% to 20%, which has already become one of the most significant problems in China. The most important reason is that the demand for property is increasing at a very fast speed. First, China is experiencing the largest urbanization in history. Migrants from the countryside enter cities every day and all of them need homes. What is more, a large number of Chinese middle classes who are living in old houses also want to move to fancier buildings. These cause the unstoppable housing price in China.
There is no doubt that what is happening now is a real estate bubble. The most obvious feature is the rapid increases in valuations of real property. The theory also points out that every real estate bubble will burst and the housing price will heavily decrease. The problem is, when?
The only thing we can say is that the real estate bubble burst will lead to a huge amount of property investment losses. However, this step is still necessary in the next phase of Chinese reform where people’s livelihood will be more pay attention to.
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