During the Spring Festival early this February, the apartment near where we live was about 13,500 RMB per sq. meter. To put it into perspective of US standard, you can safely assume it is a 100 sq. meter house with 2 bed rooms, one living room, one dining room, and it costs 1,350,000 RMB.
Today, we find out the price has raised to 17,000 RMB per sq. meter, based on real transaction price. The same apartment of 1.35 million RMB is now 1.7 million RMB, 25% increase in a very short period of 4 months.
To further put it into perspectives, it is at the deep bottom of the world financial crisis, and spreading real estate crisis.
Why This Happens?
Disclaimer: I know nothing about economics although I have a wife whose second major is Technical Economics. :-)
I guess this happens because of the relaxed financial policy the central government put into place. The house agents are pretty sensitive to any policy that affects their business. They said, they can settle all finance related requirements for you if you want to buy a house. For example, they can help those who cannot get mortgage to get it, and they can get 80% of mortgage amount of a house for people who already have many apartments. The previous policy set very high bar for these type of risky borrowers.
That obviously works. When the buyers have financial lever to make the purchase, the house market is activated, and ridiculous thing like 25% increase in 4 months happens.