A city's overall appeal would be hurt if property prices climb
at a much higher rate, putting it out of balance with its local
economic development, says an editorial in Beijing News.
The following is an excerpt:
China City Forum released a report on Tuesday, analyzing the
overall competence of major cities in the country. The four
municipalities: Beijing, Tianjin, Shanghai and Chongqing, all
ranked high on the list. They have another point in common. They
all got negative marks for their high costs of living, dragging
them down the list.
High property prices have become an obstacle for the overall
competence of the cities.
Of course, property prices do rise when a city witnesses an
economic boom.
Properties close to Wall Street are expensive because the
neighborhood is a cluster of world-class financial institutions.
But before this financial center emerged estate prices weren't
unusually high.
When a city's property prices hike beyond the level of local
economic development, it makes the city much less appealing to its
residents, investors and migrants.
The people with relatively weaker capability to withstand the
pressure of high estate prices are the migrant workers. If they are
forced to leave the city because it is too expensive, the
processing enterprises or other labor-intensive industries in the
city may soon see a shortage of hands. And the local economy may
suffer, at least temporary, stress.
High estate prices may also drive away potential commercial
investors.
The competence of a city depends on multiple elements, including
the market, environment and information systems.
The major cities in China, like Beijing and Shanghai, are
popular among investors because they have accumulated rich economic
and social resources. If not checked, high estate prices could soon
write off these advantages and weaken the appeal of these
cities.
(China Daily September 14, 2007)