Monitor | Contradictory figures fuelling China property bubble debate
To settle this argument we need to know how much housing was built since 1995. Sadly, the official numbers are all over the map
Chatter about a bubble in China's property market has risen to deafening volumes lately.
Since the authorities released numbers last week showing that home prices in major cities climbed 15 per cent or more over the 12 months to August, a whole tribe of bears has emerged from the woods to warn that the Chinese property market is being propelled by an unsustainable speculative frenzy and is now primed for a devastating collapse.
Nonsense, retort the bulls. The market is propelled by healthy demand, and anyway, prices eased last month compared with July.
As always, making out the true picture is tricky.
The classic bubble argument goes something like this: China's new middle classes are keen savers. But deposit rates are barely positive in real, inflation-adjusted terms. And the stock market is down more than 60 per cent from its 2007 high.
That only leaves housing as a trusted store of wealth. As a result, buyers have piled into property, purchasing multiple flats in new developments with their newly earned cash.