I recently read a study by the Chinese government about how inflated they think their real estate market is.
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The key points…
Of the 35 major cities surveyed, property prices in 11 including Beijing and Shanghai were between 30% and 50% above their market value, the China Daily said. And in some major cities like Fuzhou, real estate is overvalued by as much as 70%. Massive stimulus measures in 2008 put lots of cash into people’s hands which is blamed for fueling the real estate prices.
Some people say that Canada is also in a real estate bubble, but we’re not as bad. A study by “The Economist” a couple months ago show that Canadian homes are 23.9% overpriced. Our house prices between 1997 and 2010 rose a whopping 70%, the report said. Or about 4% every year on average. Although in cities like Toronto and Vancouver it’s more like 5%.
Here are some other results of The Economist survey and how we compare to other countries:
Overvalued countries:
- Italy: 10.5%
- Ireland: 13.2%
- Canada: 23.9%
- Britain: 32.0%
- France: 42.5%
- Hong Kong: 58.1%
- Australia: 63.2%
Undervalued countries:
- US (Using the Case-Shiller national index): -2.1%
- Switzerland: -6.4%
- Germany: -12.9%
- Japan: -34.6%
