The Chinese Academy of Social Science (CASS), a top thinktank in
China, has warned of the potential danger of a property bubbles
burst in China in a report on the world economy in 2007.
Citing the example of the real estate burst in Japan in the
early 1990s, the report advised the Chinese government to take
effective measures to curb skyrocketing housing prices.
Before Japan's economy faltered in 1990, the yen appreciated,
housing prices surged and the stock market boomed just like China
at the moment, it said.
The report recognized the macro-economic control efforts the
Chinese government made last year including raising deposit reserve
ratios, curbing investment in fixed assets and using industrial
policies to boost the supply of small affordable apartments.
"Housing is a key element of domestic consumption. With housing
prices continuing to rise, the government must beware of a property
bubble," it said.
The report suggested the government restrain credit until the
sizzling real estate sector cools down.
The average housing price of newly-built apartments in China's
70 major cities rose 5.8 percent year-on-year in November last
year.
Housing prices in Fuzhou, capital city of southeastern Fujian
Province, posted the fastest increase of 10.4 percent in November,
followed by Beijing with a rise of 10.3 percent.
Housing prices in coastal cities including Shenzhen, Xiamen and
Qinhuangdao also posted an increase of over 9 percent.
Shanghai is the only city that witnessed a slight drop of 0.1
percent in housing prices in November.
In November, the average prices of second-hand houses in the 70
cities rose by 5.2 percent over the same period of last year and
the prices of commercial buildings increased 4 percent
year-on-year.
(Xinhua News Agency January 13, 2007)