Dec 142010

I recently read a study by the Chinese government about how inflated they think their real estate market is.

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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