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70% Of Chinese Are Priced Out Of Their Own Housing Market

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China's central bank seeks to cool overheated sectors

HYDERABAD, India (AFP) - China's central bank is seeking to cool down overheating economic sectors such as real estate as well as cut massive foreign exchange reserves, a top government official revealed.
The statement by Li Yong, Vice Minister of Finance, at the annual Asian Development Bank meeting in this southern Indian city came as he said economic growth in 2006 could hit 9.5 percent without new fiscal and monetary steps.
The concern about overheating comes after the economy expanded by faster-than-expected 10.2 percent in the first quarter over the same period the previous year, after posting a rate of 9.9 percent for all of 2005.
"During the first quarter of 2006 we have tried to balance investments in certain sectors," the minister told delegates.
"These sectors such as real estate and steel became overheated in 2005. Our central bank is trying to cool down overinvestment in these sectors," he said.
Housing has become so expensive in China that seven out of 10 urban families cannot afford their own homes, the state-owned Xinhua news agency said.
In April the People's Bank of China boosted the one-year benchmark lending rate by 27 basis points to 5.85 percent to brake credit and control "excessively fast" release of bank loans.
It forecast growth of 8.9 percent for 2006.
Analysts said the decision to raise interest rates for the first time in 18 months was only the first in a series of measures aimed at preventing the booming economy from overheating.
"We will make adjustments (in the interest rate) if it is appropriate. We will gradually adjust the rate," junior finance minister Li said.

As China raises the rates it will impact the world given its status as the world's fastest growing economy. At least the Chinese, unlike Gordon "Miracle Ecoonomy" Brown see the destructive nature of HPI and MEW. They obviously do not buy into wealth from the air like Gordon.

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It's a long time ago now - but in the bridge beween chinese taking back Hong Kong and UK owning Hong Kong there was a scheme to make flats available to the "sandwhich class" as they referred to it.

A one bed flat cost millions - even allowing for the exchange in currency - they were very expensive - but low interest rates enabled Chinese friends of mine to buy.

No unlike UK today, there had been a massive building programme of 1/2 bed flats in new big high rises on new sites, and they couldn't sell, so pushed them to those who could just afford at the time.

Sadly, when I moved a few years later back to UK lost touch with my Chinese friends who bought - so don't know how they did - except they were struggling then.

Plus ex-pat and returnee Chinese friends who are still there - and who have good jobs - and were willing to move into China to buy - and commute to HK to work - have been priced out.

Haven't done the research, but suspect, it's not that different to here in many ways for most who earn above local wage, even with two salaries, but not mega bucks.

Also, there is very much a "rental" culture there instead of buy anyways.

Not sure that in such a fledgling economy it would be HPI that drives the intest rates. There's more to it than that particularly as no external chinese company can own more than 50% of the company.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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