China Attempts to Deflate its Unstable Property Bubble

The Chinese government has announced plans to build affordable housing to help calm the surging property market. From the Guardian:

China will spend nearly $200bn (£123bn) on the scheme, part of plans to build 36m low-cost homes over the next five years, said deputy housing minister Qi Ji, speaking at an annual political meeting in the .

The pledge came a few days after premier Wen Jiabao promised to “resolutely” curb speculation to tackle excessively rapid increases.

Authorities have taken a series of measures since spring last year, including raising interest rates, increasing the minimum down-payment on second homes and restricting the rights of foreigners to buy or Chinese citizens to buy multiple units. Two cities are imposing sales .

While the measures have slowed growth, many fear remains too high. In March , housing prices shot up by 11.7% year-on-year, according to figures from the national bureau of statistics. December saw the lowest increase in over a year – but it was still 6.4%.

Economists are watching for the latest data anxiously: independent research from SouFun suggested a month-on-month increase of around 1% in January: the biggest such increase for half a year.

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