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Property in China Attracting More Overseas Investors - 12 October 2009

Chinese property quickly went back on the rebound, rising in the first two quarters of 2009, after a slight decline in prices the year before. House prices increased by 3.2% YOY, based on statistics in China, though other sources cite a much higher percentage.

Foreign investors are allowed to own property in China, and as a result, many experts felt that Chinese property was also vulnerable to the bubble burst felt across several markets in 2008. Instead, it was merely a slight bump, and the government quickly acted in order to make property buying flow steadily again.

Property prices in major cities such as Beijing and Shanghai not only bounced back, but resumed the pace of a couple years ago – property prices in Shanghai increased by 19% between March and July 2009 according to China Daily, and several firms expect that to keep pace for the next 12 months at least. However, data from the Chinese market is quite unregulated and many sources have differing stats. The only one general consensus for all the stats though, was that they were all positive.

The growth of the relatively untapped mortgage market in China also plays a factor. Home mortgage loans still are done by state-owned banks for the most part, and loans account for less than 10% of GDP, as opposed to an approximately 50% GBP ratio in the UK and US.

The economy is expected to expand by 7.5% in 2009, according to the IMF and is expected to continue its rapid growth. This will help strengthen the housing market further. And it’s not just the property market within China. Chinese investors are looking at property abroad more and more, for example – in Australia, some agents report that over 30 percent of sales went to Chinese buyers compared to 15 per cent last year.

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