“According to research results released yesterday by DTZ, the average sale price in the city’s most luxurious residential properties has soared above 50,000 yuan (US$7,324) per square meter in Shanghai this year from about 7,000 yuan per square meter seven years ago.
Sales by value of high-end properties within the city’s Inner Ring Road more than doubled in the first nine months of this year, with the average price surging to 37,000 yuan per square meter from 24,000 yuan at the beginning of this year.”
While the population of China is large, it is finite. And as A. Gary Schilling pointed out at the beginning of 2009, the number of Chinese with any disposable income is shockingly small. At some point the pool of greater fools will run out, or some will need to cash out to meet expenses. Then, the rush for te exits will start. The problem, as always, is when this happens.
Ten percent annual GDP growth can hide the bubble for a long time. Or China could grow into the real estate. Most of the current stock of residential is still inferior.
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