Runaway property prices in some major cities have had their respective governments scrambling to rein in the market.
In Beijing for example, regulations pertaining to online real estate portals have been set, resulting in 15 such sites having had to remove misleading information from their website. False advertising is rampant and could have had a part to play in the skyrocketing of home prices in Beijing. Many online sites promise “limitless potential for price gains” and even fengshui advice, boosting an atmosphere that is ripe for speculation. The government fears that uncontrolled price increases will result in household debt and ballooning bank credit risks and generally creating a sense of uncertainty and discontent on the grassroots level. This latest move is on top of other rules already implemented in attempt to cool the market in the Chinese capital. Minimum down payment for a second property has already been increased from 50 to 60 per cent and purchase of a third property is disallowed.
In Australia, a surging housing market also has the Australian government trying to relieve the pressure on a possible property bubble which is in danger of bursting, with dire consequences for the economy, possibly even the first recession in 26 years. They have issued warnings to banks for the latter to curb home lendings, in particular to investors. Almost 50 per cent of the home loans taken out from Australian banks are from investors.
Interest rates have been at a record low, accounting for the heightened number of loans, which in turn has caused property prices to rise exponentially, with that in Sydney rising 104 per cent and in Melbourne, 88 per cent. Household debt has already risen to 189 per cent, one of the highest in the world and many Australian households now find themselves ladened with hefty home mortgages, which could be problematic should unemployment or a recession take place.