Govt has vital role in curbing realty price hikes

SINCE LATE 2015, real estate prices in metropolises such as Beijing, Shanghai and Shenzhen have been rising steadily. Several department heads of the State Council, China's Cabinet, have said recently they will strengthen measures to control the markets in these cities. Beijing Times comments:

One of the main causes of this round of property price rises has been the easing of monetary policies over the past few months. The standards for obtaining loans have been rather loose and there has been increased speculation in real estate.

Moreover, some realty agencies even offer loans to those who do not have enough money for a down payment. This is similar to subprime credit, which caused the financial crisis in the US in 2008 that evolved into a global one. It is highly risky because in case the loaner gives up the realty by ceasing to pay the loans, the bad debt ratio might abruptly rise for banks.