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Actuality of the market Real estate China:  a law to fight against the speculation

July 07, 2008

Attention, opening in a new window. ImprimerEmail A new law makes speak of it in China:  it is about the government’s initiative to discourage the foreign speculation on the Chinese real estate market. This law makes obligatory the obtaining of an approval on behalf of the strangers at the time of their real estate transactions done on the Chinese territory before they can repatriate funds won in other countries.

According to the circular established by the administration of state of the foreign currency and the ministry of the construction, the foreign investors anxious to place their money in Chinese real estate societies should fulfill of the purchase price in totality. The objective of the Chinese government is to manage the foreign direct investment rigorously in the real estate sector.

Besides, the banks and other Chinese foreign currency administrations should increase their level of vigilance and surveillance of the property transactions done in foreign currency. They should also establish a report by the state every time that an act of property will have hired some foreign currency.

This circular includes a lot of other measures in the goal to control the real estate sector and of " to close the door to the speculators besides sea" according to the Chinese ministry of the construction. Indeed, China is certainly a territory vast, but that shelters an immense population. Following the invasion of the foreign funds in China. having had for consequence the reduction of the number of naked lands where it is possible to construct some dwellings. the government has rigidifié the real estate transactions achieved by strangers to tempt to discourage the speculation.

Some Chinese cities to the picture of Shanghai knew a blaze of the prices of the real estates, passing the simple to the double. It had the effect of returning the conditions of access to the even more difficult property for the local population. Besides, with the increase of the interest rates insider repeatedly by China in 2007, the activity of home loan of the Chinese banks fell distinctly. Struggle against the inflation and raise of the real estate growth constitutes a difficult equation to solve.

The local policies try therefore to throw back to all price the real estate market in order to amplify the volumes exchanged on the market and to slow down the increase in prices.