During the first quarter of 2011, 16 provinces among the 22 Chinese provinces published their preliminary GDP quarterly growth. However, it appears only 2 provinces achieved a slight increase in GDP growth rate comparing to the 1st quarter of 2010, all the remaining 14 provinces experienced lower growth rate in comparison with same period last year. The national average GDP growth rate also declined from 11.9% in the first quarter of 2010 to 9.7% during the same period 2011. Below is the breakdown of the GDP growth rate by province:

Provinces GDP growth 1st Quarter 2010 GDP growth 1st Quarter 2011 Trend of GDP growth
Beijing 14.9% 8.6%
Fujian 15.3% 14.5%
Guangdong 12.5% 10.5%
Guangxi 13.8% 12.1%
Hainan 25.1% 10.0%
Hebei 13.3% 11.2%
Heilongjiang 12.8% 12.0%
Hubei 15.9% 14.4%
Hunan 13.6% 13.9%
Qinghai 13.5% 12.3%
Shannxi 18.2% 13.6%
Shanxi 19.4% 12.8%
Sichuan 17.7% 15.0%
Tianjin 18.1% 16.5%
Xinjiang 11.4% 11.5%
Yunnan 15.0% 12.5%
National 11.9% 9.7%

Harsher regulations over the real estate market such as housing “price cap” since late last year may have played a major role in the decline of GDP growth rate. Housing activities have shown a slowing trend since last year.

Data from the central government indicate that during the 10-year period from 2001 to 2010, only 2008 reflected a slight drop in house prices in China, while all the other 9 years witnessed rising housing prices – during 5 of these 9 years, home prices have enjoyed double-digit gain.  Below is an illustration of average home prices in certain major cities in China for 2010:

2010 average home price   (¥) per square meter (m2) 2010 average home price(US$) per square feet (f2) average price for 1,000 square feet home
Beijing ¥ 20,342/ m2 $286.24 per square feet $286,240
Changsha ¥ 5,556/ m2 $78.18 per square feet $78,180
Changchun ¥ 5,210/ m2 $73.31 per square feet $73,310
Chengdu ¥ 6,332/ m2 $89.10 per square feet $89,100
Dalian ¥ 9,278/ m2 $130.55 per square feet $130,550
Foshan ¥ 8,427/ m2 $118.58 per square feet $118,580
Fuzhou ¥ 11,942/ m2 $168.04 per square feet $168,040
Guangzhou ¥ 11,695/ m2 $164.56 per square feet $164,560
Guiyang ¥ 4,530/ m2 $63.74 per square feet $63,740
Haikou ¥ 8,877/ m2 $124.91 per square feet $124,910
Jinan ¥ 7,792/ m2 $109.64 per square feet $109,640
Lanzhou ¥ 6,049/ m2 $85.12 per square feet $85,120
Nanjing ¥ 10,916/ m2 $153.60 per square feet $153,600
Ningbo ¥ 14,474/ m2 $203.67 per square feet $203,670
Qingdao ¥ 8,209/ m2 $115.51 per square feet $115,510
Shanghai ¥ 14,213/ m2 $200.00 per square feet $200,000
Shenyang ¥ 5,504/ m2 $77.45 per square feet $77,450
Shenzhen ¥ 8,209/ m2 $115.51 per square feet $115,510
Suzhou ¥ 11,233/ m2 $158.06 per square feet $158,060
Taiyuan ¥ 8,121/ m2 $114.27 per square feet $114,270
Wuhan ¥ 6,852/ m2 $96.42 per square feet $96,420
Wuxi ¥ 8,203/ m2 $115.43 per square feet $115,430
Xiamen ¥ 11,672/ m2 $164.24 per square feet $164,240
Xi an ¥ 6,207/ m2 $87.34 per square feet $87,340

As shown above, the average prices from major cities in China range from $63,740 to $286,240 for a 1,000 square feet home, most of these homes are condos. To put things in perspective, the US median existing single-family home price in February 2011 is approximately $157,000.  However, let’s compare the GDPs of these two countries: in 2010, USA’s total GDP is estimated at $14.624 trillion with GDP per capita at approximately $47,123 annually; whereas China’s total GDP is estimated at $5.7 trillion, with GDP per capital at only $7,400, which is well below world-average. The average current employment income is China is believed to be approximately $4,325 per year. Will this type of family income sustain that kind of home price? One can imagine the huge burden for an average family to try to buy a property in China today! Is it time for China’s housing bubble to burst? We will wait and see.

 

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