1) The distance between the rich and the poor is sigmificant, low salary and imcomplete security insurance
Acorrding to HuRun Wealth Report, China has 0.96 million multimillionaire. Moreover, over 60 thousand of them are billionaires. The rich could buy any houses as they want and did not care what prices of the houses, which led to an increase in the housing prices.
besides, Ordinary people consumed less due to the low salary and imcomplete security. This definately decreased the damand and supply of consume products. The further consequnce is that investors would choose to invest in real state rather than in industry.
2) The fiscal policy of America and China increase the liquidity in market and inflation
The slack monetary policy and proactive fiscal policy of the U.S. after the dot com bubble and increase in money supply after credit risk forced great amount of U.S. dollars flow into Chinese market,leading to over liquidity in Chinese market and high inflation. Besides, Chinese government stimulated the economy with $0.62 trillion, which drove the housing prices of China grow to a higher level to some extent.
The slack monetary policy and proactive fiscal policy of the U.S. after the dot com bubble and increase in money supply after credit risk forced great amount of U.S. dollars flow into Chinese market,leading to over liquidity in Chinese market and high inflation. Besides, Chinese government stimulated the economy with $0.62 trillion, which drove the housing prices of China grow to a higher level to some extent.
3) Local governments rely too much on land incomes
Land in China is owned by the government, with usage rights granted to individuals and corporations through long-term leases. Local governments garner revenues from land through both taxes and fees. Higher property price brings higher revenue to local governments, and that's why local governments are reluctant to control or decrease the property prices.
Land in China is owned by the government, with usage rights granted to individuals and corporations through long-term leases. Local governments garner revenues from land through both taxes and fees. Higher property price brings higher revenue to local governments, and that's why local governments are reluctant to control or decrease the property prices.
4) Too strong monopoly power
Barriers to private enterprises from monopoly companies, restriction on financial development of civilian, unreasonable taxes for private enterprises made small firms in China hard to survive and drove them reluctant to invest in real economy. The consequence was that funds flew into housing market.
Barriers to private enterprises from monopoly companies, restriction on financial development of civilian, unreasonable taxes for private enterprises made small firms in China hard to survive and drove them reluctant to invest in real economy. The consequence was that funds flew into housing market.
source: commerce department
5) Corruption of Chinese government officials
6) One child policy and Chinese traditional concept
It is shame for a man getting marry without owning a house in China.Most females in China are reluctant to marry males without a house or a car. Although some females accept those men, their parents will not accept such sons-in-law. So owing a house becomes one of the essential conditions of getting marry for a man. From the statistic report of LIANJIA Property Trade center, the average of initial house purchaser is 27 in Bejing, 42 in Japan and Germany, over 30 in America and 36 in Taiwan. These data does not indicate that young people in Beijing are rich, but indicate that most parents buy houses for their children. "Thanks" to the one child policy in China, most families have one child. This phenomenon enhance the paying ability of parents. Parents can now purchase a house or afford down-payment of it for their only son. One child policy and the traditional marriage concept make the housing prices less elasticity!
7) Bubble market psychology
The book "The great housing bubble-why did house prices fall?" states that property bubbles caused by speculators fear and greed. Another book called "Financial psychology" by Las Tvede mentions that stock price movement is determined by human psychology, such as conformity, fluck mind,etc. The same principle can be applied to house market.
It is shame for a man getting marry without owning a house in China.Most females in China are reluctant to marry males without a house or a car. Although some females accept those men, their parents will not accept such sons-in-law. So owing a house becomes one of the essential conditions of getting marry for a man. From the statistic report of LIANJIA Property Trade center, the average of initial house purchaser is 27 in Bejing, 42 in Japan and Germany, over 30 in America and 36 in Taiwan. These data does not indicate that young people in Beijing are rich, but indicate that most parents buy houses for their children. "Thanks" to the one child policy in China, most families have one child. This phenomenon enhance the paying ability of parents. Parents can now purchase a house or afford down-payment of it for their only son. One child policy and the traditional marriage concept make the housing prices less elasticity!
7) Bubble market psychology
The book "The great housing bubble-why did house prices fall?" states that property bubbles caused by speculators fear and greed. Another book called "Financial psychology" by Las Tvede mentions that stock price movement is determined by human psychology, such as conformity, fluck mind,etc. The same principle can be applied to house market.
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