Kangbashi/Inner Mongolia home market on brink of collapse as home prices in the area have tumbled from 20,000 yuan (US$3,200) to 3,000 yuan (US$500) a square meter

August 27, 2013 Leave a comment

Kangbashi home market on brink of collapse

Staff Reporter

2013-08-27

The housing market in Kangbashi New Area, a district in Ordos in Inner Mongolia, is on the brink of collapse as home prices in the area have tumbled from 20,000 yuan (US$3,200) to 3,000 yuan (US$500) a square meter, the state-run China Youth Daily reports. China’s real estate bubble seems to have spread to medium and small cities mainly due to excess supply as a result of massive outflows of local residents and low income levels in less developed cities, say analysts who are bearish on the property market.The situation is particularly conspicuous in Kangbashi, Wenzhou in Zhejiang province and Shenmu county in Yulin, Shaanxi province, according to market analysts. Wenzhou home prices have been on the fall for 23 months and some home owners have been on the run after giving up their properties, prompting the banks to move in. The dwindling market in Shenmu was attributed to a downturn in the local coal industry, the report said.

The property market in China’s over 200 medium- and small-sized cities is a key factor affecting the country’s economic growth this year, the report added.

A research team with Standard Chartered Bank found that based on the results of a survey that the property market in the 200 cities was not as bad as forecast with the exception of Kangbashi which gained worldwide notoriety in 2010 after it was dubbed by Time magazine as a modern ghost town.

The research team said that increasing land sales signaled that the property market in small cities is in moderate recovery.

Property development companies have been trying to acquire more land in medium and small cities, implying that the problem of oversupply of houses in such cities is not prevalent. Among China’s over 650 cities, about 300 are promoting the residential housing market, the team said, adding that generally speaking, except for Kangbashi, the housing market in small and medium cities is still relatively stable.

Filed under Macro Trends

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