Imay have found the silver lining to the global downturn cloud – and it comes in the unlikely form of a bureaucratic announcement from the Chinese government.
The country has vowed to stop foreign property speculation causing a price bubble in both the commercial and residential markets. A directive from it's state council, effectively its top tier of government, says: "Relevant departments must enhance monitoring of loans and cross-border investment to prevent illegal inflows of capital into the property market and to avoid the impact of overseas hot money on China's real-estate market."
The statement goes on to say China's banking regulator will increase controls over mortgage lending, too.
This is bureaucrat-speak for a very welcome trend – that the country will not allow price bubbles to destroy its businesses and individuals, who are priced out now by speculators. As in so many countries, many Chinese say global speculation (rather than true investment) has pushed up prices in an unsustainable fashion leading to the inevitable burst bubbles that we know so well.
The state council says it will stop residential bulk-purchasing and make it mandatory for anyone buying a second home – for whatever reason – to pay a 40 per cent deposit. This follows reforms of the buying process in eastern Europe, and the promise of more transparency in real estate markets across Asia and the Middle East, too. Let's be honest. These would not have happened without a recession. Nobody wanted the downturn but if it helps clean up property, it's done some good.
- The writer is Property Consultant with The Observer
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