Dec 142010
 

I recently read a study by the Chinese government about how inflated they think their real estate market is.
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The key points…
Of the 35 major cities surveyed, property prices in 11 including Beijing and Shanghai were between 30% and 50% above their market value, the China Daily said. And in some major cities like Fuzhou, real estate is overvalued by as much as 70%. Massive stimulus measures in 2008 put lots of cash into people’s hands which is blamed for fueling the real estate prices.

Some people say that Canada is also in a real estate bubble, but we’re not as bad. A study by “The Economist” a couple months ago show that Canadian homes are 23.9% overpriced. Our house prices between 1997 and 2010 rose a whopping 70%, the report said. Or about 4% every year on average. Although in cities like Toronto and Vancouver it’s more like 5%.

Here are some other results of The Economist survey and how we compare to other countries:
Overvalued countries:

  • Italy:                 10.5%
  • Ireland:              13.2%
  • Canada:             23.9%
  • Britain:               32.0%
  • France:              42.5%
  • Hong Kong:        58.1%
  • Australia:           63.2%

Undervalued countries:

  • US (Using the Case-Shiller national index): -2.1%
  • Switzerland:      -6.4%
  • Germany:        -12.9%
  • Japan:             -34.6%

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