Thursday, October 15, 2009

Chinese Real Estate Bubble?

We call "bubble: when one market price gets too high relative to a related market. The Chinese residential real estate market seems out of whack with its labor market:
In Dongguan, a coastal second-tier city in Guangdong province, land prices averaged 4,957 yuan ($726.42) per square meter in 2007, a more than 500 percent increase from 2003, while personal disposable income increased 24 percent during the same period (from 20,526 yuan [$3,008] to 27,025 yuan [$3,960] per year).

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