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Facts About Property Price Increases in China

Facts About Property Price Increases in China
May 24, 2010 (Linette Ng) The graph below demonstrates the price indices of property sales in China over the last 14 months, with the latest price rise of 12.8% year-on-year in April. However, in mid-April, the government has adopted tightening measures to curb the price rises, and the effect of these will likely be reflected in the price indices for May. In the week following the release of the new policies, new and second hand housing prices fell by approximately 30% in Beijing. The average house prices in Shenzhen fell by 25.44% and in Shanghai by 12.2%.

The policies implemented by the government include:

• Increasing the required down payment for a second housing mortgage from approximately 30% to the current 50%. (April 15)

• Increasing the borrowing rate on the second mortgage to 1.1 times the benchmark rates. (April 15)

• Local governments can restrict the number of units that can be bought. (April 17)

• Banks are required to suspend lending to third home buyers, and to those who cannot provide tax returns or proof of social security contributions in the related city for at least one year. (April 17)

• Property developers who deliberately delay proposed sales dates to raise housing prices will be punished. (April 21)

• Developers are not allowed to take deposits for sales of uncompleted apartments without approval. (April 21)

• Developers must disclose to the public all apartments available for sale along with their prices, and commence sales within 10 days upon obtaining pre-sale approval. (April 21)

Beijing city government was one of the first cities to follow up on the central government’s policies, announcing 12 measures to curb speculative price rises in the local property market, including limiting the number of units that can be bought and increasing the down payments and mortgage rates. Average prices of Beijing’s commercial residential properties for the week ended May 9 fell by 9.6% from the week before, and 31.43% from the week ended April 11. Prices of newly built houses in Beijing declined between 2,000 to 5,000 yuan. With these measures put in place to curb the speculation of the real estate market, the property sales and price rises are expected to slow down.

Data sourced from National Bureau of Statistics of China

 

 
Knowledge base

Taiwan Q1 GDP Outpaces Mainland

Taiwan Q1 GDP Outpaces Mainland

May 21, 2010 (Chinavestor) Taiwan's GDP soared by the most rapid pace in three decades, growing by 13.27% in the first quarter, outpacing the sterling growth of 11.9% posted by mainland China. Analysts were expecting the island country's economy to expand by 11% during the quarter.

Taiwan raised its 2010 GDP growth forecast to 6.14% from 4.72%, but also nudged its inflation target to 1.4% from 1.27%. Taiwan has kept interest rates steady at 1.25% since last year.

Taiwan is working on a trade agreement with China, its largest trading partner. Exports to China soared 62% in April from a year earlier, after an 82% gain in March, according to Bloomberg News.

Taiwan Semiconductor (NYSE:TSM) is Taiwan's largest listed company.

Knowledge base

What's behind the Chinese real estate bubble?

What's behind the Chinese real estate bubble?
May 20, 2010 (Chinavestor) It's hard to nail it down to one factor what's behind China's property price increase, but the issue is hotly debated and is instrumental in understanding the latest performance of the Chinese equity markets. Excess liquidity stemming from the 2008-2009 stimulus package is obvious. But the devil is always in the details, so it's worth examining what keeps fueling housing prices.
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Knowledge base

The truth about the Chinese real estate bubble

The truth about the Chinese real estate bubble

May 18, 2010 (Yantao Li) The movement of the property selling price

 

According to the latest report from National Bureau of Statistics of China, in April, 2010, the selling price of property in 70 medium-large cities of China has increased 12.8% compared to the figure of same month last year. The price of newly constructed buildings has increased by 15.4% year-on-year. The price of commercial residential property has gone up by 17.3%.
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Knowledge base

Overview: China Real Estate Market

Overview: China Real Estate Market

April 30, 2010 (Yantao Li) There has been a lot of news recently about the efforts by the Chinese government to cool-off the property market. The Shanghai Composite Index (SHA:000001) has fallen to record lows in 2010 as the government is cracking down on the sector. For this reason we're going to take a closer look at the sector, its size, key players, the presumed property bubble and its implications.

1978 marked a beginning of a new area in China in the property market - the first time commercial building was allowed since 1949. Over time China has developed a highly competitive real estate market. There are over 200 listed or non-listed real estate companies as well as many real estate service providers.

 

Stocks mentioned in this report: China Housing & Land Development, Inc (NYSE:CHLD), China Infrastructure Investment Corporation (NYSE:CIIC), Xinyuan Real Estate Co., Ltd (NYSE:XIN), E-House (China) Holdings Limited (NYSE:EJ), China Real Estate Information Corporation (NYSE:CRIC), China Vanke Co., Ltd (SZSE: 000002), China Overseas Holdings Limited (HKSE: 0688) and Agile Property Holding Limited (HKSE: 3383).
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