Through the gloom of so much bad news for the world economic picture shines a ray of hope: the Chinese real estate market may be picking up. The most recent survey shows prices are rising in China’s 100 largest cities, the first increase in nine months. Real-estate investment and property sales are also on the rise.As the Wall Street Journal notes, these data are good news not only for Beijing but for the global economy as well:
An improvement in China’s property market would be important for the domestic and international economy. Real estate and property construction account for about 11% of the Chinese economy, according to GK Dragonomics, and about twice that share when accounting for other industries like appliances and furniture that are tied to real estate.Internationally, steel, iron ore, copper and other commodities depend on the Chinese real-estate market for growth, as do construction-equipment makers in the U.S. and Europe.
From 2006 to 2010 house prices in major cities nearly doubled. Worried that the housing market represented a bubble that, if it burst, could deflate the entire economy, Chinese government officials introduced a range of measures to reel in property prices. While not faultless, those policies seem to have accomplished their primary goal and stabilized the market.None of this means that there isn’t a huge real estate bubble in China, of course. But it does mean that the bubble may not burst this summer. That, given the world’s other worries, is good enough news for right now.