China’s efforts to beat back coronavirus led to widespread travel restrictions and shutdowns. But it appears to have been just a hiccup for the property boom in its biggest cities.
Home prices continue to rise higher and units are flying off the shelves again. More money was invested last month in Chinese real estate than any other month recorded, according to the Wall Street Journal.
One estimate found Shanghai apartment resales approached a record high in April. A month earlier, 288 apartments at a new development in Shenzhen sold online in less than eight minutes. More than 400 units sold a day later at another new development in the city.
The fervor with which buyers are scooping up units is raising concerns that China’s property bubble is growing bigger by the day. The $1.4 trillion invested into the housing market in the 12 months ending in June is far higher than the annual $900 billion invested into housing in the U.S. housing market at the peak of the bubble before the last financial crisis.
Chinese buyers are also more heavily leveraged than they’ve ever been — in the first quarter, the household leverage ratio hit a record high of 57.7 percent.
Buyers appear confident that the Chinese government won’t let the bottom fall out under the housing market, so they’re confident to keep buying, according to the Journal.
“Property has hijacked China’s economy, so the government wouldn’t dare to push for a plunge in housing prices, even if that’s the most effective way to deflate the bubble,” said Chen Zhiyu, who is hunting for property in Shenzhen. [WSJ] — Dennis Lynch