There is evidence that some house builders have been sitting on properties, deliberately holding back apartments to artificially drive up house prices. According to market researchers Dragonomics, despite a bumpy ride month-on-month, prices in China’s major cities rose 21.5% in 2010; 10% in 2009; but the April-to-April figure is 4.9%. As the market tilts in the opposite direction, there is the risk that all these properties could fall out of the developers’ pockets and drag property prices down at an even faster rate. Add in tighter lending controls and their effect on developers carrying unsold bricks and mortar, expectations of falling demand (the result of increased taxes and, again, tighter lending conditions), and an unwillingness among China’s cash-rich to risk their money on a falling market when there’s foreign property instead, and you have something like a perfect storm. (Citywire, June 29, 2011)
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