Topic: Real estate crash in China

Name: Cookies
Class: DEC 25 (3)
Subject: writing explanation essay
Date: March 7th, 2013

Commodity prices are constantly changing all over the world especially in countries which are developing rapidly such as China. One of the main variations has been shown at housing market. Carried out by the national bureau statistic, housing prices have raised 7.8 percent in 70% large an medium-sized cities of China. Urbanization is the main contributing factors to the increasing house prices. In addition, both political and economical factors have played a role in this markup. There factors have a number of consequences, and implications for the future.

The premier reason for this phenomenon is that China has step into a quickened urbanization process. A increasing number of skilled and high-educated people from the young generation who are studying and working in the big cities such as Beijing and Shanghai have the strong craving to buy houses and raise new families in these urban areas which are densely populated. This has led to that the new residents want to purchase their house as quickly as possible in case that the price will rise to a level they can not afford. This trend has a devastating impact on house market where the property developers are confidence to keep prices high.

The series of property policies which are carried out in different periods has contributed to the continued increasing price of property. Due to the system of land tenure, the local governments who are behind all the land trades have make a great profit from it. In addition, although the central government has taken steps and tried to regulate the real house market, it seems that the series of policies do not function well but also make situation beyond controlled. Instead of waiting, people who have rigid demand on houses will soon make a decision to purchase their houses because the great anxiety of frequently changed on policies which might result in seriously home-purchase restrictions.

Moreover, economic development in China has triggered price rises for property. Chinese have exponential growth affluence, which means a lot more money will be move from subsistence living cost and holding real estate is becoming a source of financial security. What is more, currency devaluation is oil on the flames which result in that holding the house turns to be their prime investment. This factor has speeded up price rising of houses immediately and has created a property bubble.

Understandably, there is a series of impacts on not only the household level but also the whole economy.

At the beginning, the consequent of increasing houses price might also affect most Chinese families who have the certain cultural beliefs. These beliefs that a man to own a house is considered to be eligible for marriage will be hardly satisfied. In this case, if there are an increasing number of people who cannot afford their house, some unrest social problems come up such as more unstable marriages and children who have divorced parents which will affect their caring insurance and the whole careers. Living like a snail in a small house, the young generation has to rent shabby outdated units and only to find out the huge gap between their dreams and reality. For Chinese, this situation is becoming more