Chinese cities have the highest home prices in the world! The home-price/income ratio of Shenzhen, Honk Kong, Beijing, and Shanghai, with 44.4, 36.2, 33.8, and 32.6 are higher than that of London's 27.8, whilst Guangzhou with 25.1 is higher than NY's 12.1. The y/y home price growth rate in 70 Chinese cities increased to 10% this year. Consequently, China has increased mortgage rates, requires at least a 30% downpayment, and has put limits on buying multiple apartments.
Regardless, the measures China is taking to minimise the housing bubble have massively backfired: not only did prices go up as a result of an anticipated increase in restrictions, but protesters are clashing with the police in the streets. This is extremely rare in China.
Videos circulating on social media showed protesters clashing with police and some being dragged away--unrest highly unwelcome in a year of a major Communist Party conclave expected to consolidate Mr. Xi's power. Shanghai promptly eased some restrictions on developers and buyers.
China, with debt being 164% of GDP, is in big trouble if it can't stop this housing bubble from growing. If it does grow and it pops, repercussions due to defaults could be felt all over the world.
How can the Chinese government find other ways to control the housing market? Are these perhaps, merely growing pains, as China is weaning itself off of it's reliance on asset bubbles for growth? Or, is this problem unstoppable and will we soon all be bearing the consequences?