Property Futures

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Middle class in China work for a lifetime to pay off mortgages

Middle class in China work for a lifetime to pay off mortgages.

Typical apartments in ShanghaiTypical apartments in Shanghai

The aspirational middle-class housing market in China means mortgages are within reach but at an added cost.

In fact, the emerging middle class economy is helping drive the housing market in the country, with gains in Q4’12 at their highest in two years.

The added cost for this middle class market is not in the average price, however, but real-estate tracking service, SouFun, notes that the average price of an apartment in China requires about 40 years worth of an annual income to pay off.

According to Bloomberg:

Mortgage rates, which move with the benchmark interest rate, usually have maturities of five to 30 years.  The People’s Bank of China’s benchmark lending rate for loans longer than five years now stands at 6.55 percent.

Outstanding residential mortgage loans grew 12.9 percent last year to 7.5 trillion yuan, the slowest pace in four years, as China tightened lending, according to central bank data.

However, prices are expected to increase, which means more of the middle class in China are rushing to buy while prices are still relatively low.  Developers are benefiting from the buying surge, noting that sales volumes are doubling or even tripling in some cases.

It’s also anticipated that the new government, taking power in March, may instil cooling measures to slow the pace of growth in the housing sector.  In the meantime, however, this may further push the current buying frenzy.

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One comment on “Middle class in China work for a lifetime to pay off mortgages

  1. alleck
    February 21, 2013

    Reblogged this on Riches With Home Rentals and commented:
    Riches with Rentals is a dedicated to people thinking of investing in the simple lucrative world of properties and becoming business entrepreneur.
    Lest face it, every riches person in the world will want to buy land or own vast properties everywhere.
    That will be let for rentals. That where money is made. http://www.homerentalbusiness.com/

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This entry was posted on February 21, 2013 by in Future, Investment, Property and tagged , , .

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