Housing prices keep rising.

    Exorbitantly high housing prices were recently fingered by independent economist Xie Guozhong as a significant obstacle to economic progress in China. He pointed out that it is difficult to maintain the growth model of past years. Currently many people park their savings in stocks and real estate, and the government is also liberal with its investments. All this leads to a chronic imbalance in China’s economy. He explained that the proportion of consumption in the country’s GDP has decreased by 10 percent in less than a decade and this problem makes it difficult for China’s economy to develop further: “High housing prices exert an enormous pressure on people and encourage them to eliminate or reduce spending in other areas. When housing prices are about to fall, the government enacts measures to support them, therefore the real estate bubble persists. When the government has no more money to support the falsely maintained values, the real estate industry collapses, with a domino effect on the national economy.” He concludes that without allowing exorbitantly high housing prices to level off, there can be no sound adjustment of China’s economy.