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Business China

Who is benifit from China real estate market?

Reading Time: 2 minutes

The first, Chinese banks. They are making money from two sides: the developer, and the home buyer. The developers borrow from the banks; they will pay interest and principle (hopefully) later on. The home buyers borrow from the bank, and pay mortgage (interest and principle).

The second, developers. It’s not hard to understand, as the market booming, the developer can charge more for the same apartment or villa.

Last but not least, the local goverment. The land in China are owned by the goverment, the developer will pay more for the new land as the housing price go up. The goverment wants its fair share of the profit too. In addition to the land, the goverment will collect more tax and fees as the housing price go up. So, as much as the (central) goverment wanted to control the housing price (we all want a harminious society, right?), the local goverment don’t think so, at least from economy side.