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Little room left for real estate boom

2014-08-27 16:17 Global Times Web Editor: Qin Dexing

An investment in real estate was once a sure thing in China, but those days are over. In July, housing prices fell on a month-to-month basis in 65 cities, more than expected, according to the National Bureau of Statistics. The emergence of ever more "ghost cities" also indicated the red-hot real estate market was cooling down.

Although they continue to put up acceptable economic growth numbers, second- and third-tier cities have been struggling to transform their economies.

Other than real estate, many cities have few if any industries that can drive local economic growth.

Consequently, a tranquil village has been occupied by new buildings and construction sites.

At present, real estate developers look to two benefits - beautiful surroundings and urbanization. But in many places, pollution has become a worrisome challenge.

A weak economy has also made it harder for workers to land satisfactory jobs. Plus, the social welfare system and basic infrastructure in some cities have not fully developed to accommodate a huge influx of new residents from the countryside.

Even if there are more sales and high prices after the removal of restrictions on home purchases, it would only be a fleeting phenomenon. Although metropolises in China still hold some appeal for professionals, there's little room for further development in the housing market in the current economy.

The real estate market in smaller cities will also see a similar recession due to weaker demand and ineffective policy changes.

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