Fears the China property market is generating a major asset bubble are not warranted, according to leading economists in China, who said massive housing demand in the country will sustain its “hyper-urbanisation” .
The current hyper-urbanisation China is seeing, demonstrated by the large numbers of the population moving from rural, farming regions to large cities, is set to continue until 2039, said China forecasting director with the Economist Intelligence Unit (EIU) in Beijing, Steven Joske.
“What’s going on in China now is the biggest single demographic shift in human history, with Chinese farmers moving into cities and there’ll almost never be anything like it ever again, even in India,” said Joske.
Joske said by 2020, 50 per cent of China’s population will be living in urban areas and with the average disposable income slowly increasing in many of China’s major cities, demand for housing will continue to grow.
“We’ve got almost 30 years of continuing urbanisation underpinning demand for housing,” Joske said.
However, while the housing market continues to boom in China as a result of urbanisation, Dr Qian Liu, a senior econometrician with the EIU in Beijing, said the quality of housing is not up to the standard being set in other areas in the world.
“According to recent studies done by the Chinese Academy of Social Science, the average lifespan of a Chinese building is only 30 years compared to 130 years in the UK. Obviously this requires a lot of reconstruction,” said Liu.