While the central government tries to contain real estate prices, prices are actually going up. Business analyst Shaun Rein explains to the BBC why high demand on the real estate market makes sure prices will continue to soar.
But analysts say it is the big cities – or what China refers to as top-tier cities – that are the main contributors to the nation’s rising property prices.
“There is more demand than supply in top-tier cities and that’s what causing property prices to go up,” said Shaun Rein, from China Market Research.
“Traffic is so bad in cities like Shanghai, and there aren’t that many new apartments being built there, so if you want to be near a central business district, the price is going to be high.
“There is also very little speculation in the market,” Mr Rein said.
“Most people are buying for themselves so they can improve the quality of their lives.
“Wealthy people want to buy multiple homes and they just can’t. They can’t even buy a third home and there are very high profit taxes if owners sell their home in less than five years.”
Demand for residential real estate in second and third-tier cities was not the same as in top-tier cities and there was some concern that too much construction was taking place, Mr Rein said.
“Overall, there are concerns that prices are too high for everyday people in top-tier cities and that there’s too much construction for demand in smaller cities. But the market is not going to explode,” he added.
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