Photo: rbnlsn on flickr
China just announced plans to increase its low-income housing supply by 72.4 per cent in a single year, according to Global Times.That means flooding the market with 10 million new homes. It also means $210 billion in new spending.
How big a number is this? Beijing sold 9,801 new homes in a red-hot November. 10 million homes would be equivalent to 85 years of new housing supply for the capital city.
The plan could cool speculation in the housing market, which has continued despite new restrictions and interest rate hikes.
It could also provide homes for the Chinese middle class, who have been priced out of the market in the past year.
Those are both good effects, but watch out: Back in 1997, Hong Kong announcement of a policy to build 85,000 low-cost homes per year coincided with a shocking 70% drop in housing prices.
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