Housing hot in China
Fan Wenbao swears he is not in the business of speculating on property. Already the owner of one home in Xinyang, a grimy city in the poor central province of Henan, China, he bought two more there last year.
"It`s an investment not to make money but to save money. Interest rates in the bank are too low," said Fan, a real estate agent. "If I buy now, the property will steadily increase in value. And at least there`s no way it can fall."
This might sound like the talk of a speculator, but Fan`s is a relatively long-term view when it comes to the Chinese housing market, one that has helped send property prices sharply higher and drawn the attention of policy-makers in Beijing.
Fan is not engaged in the kind of rapid buying and selling that has driven property prices up by 50 per cent in just a few weeks on the tropical island of Hainan, home to the country`s hottest real estate.
In Xinyang, property prices rose a mere 10 per cent last year. But that is enough to worry the central bank. Property beckons to homeowners and speculators as the one asset in China that is performing well, and authorities are intensifying efforts to prevent a housing bubble from forming.
Even the modest price appreciation seen in Xinyang outstrips the benchmark deposit rate of 2.25 per cent.
With inflation expected to reach five per cent this year, people like Fan are realizing that their savings are at risk sitting in bank accounts.
Investment alternatives are few in China. The stock market has been sluggish for nearly half a year and foreign investments are all but closed to ordinary people.
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