A city's overall appeal would be hurt if property prices climb at a much higher rate, putting it out of balance with its local economic development, says an editorial in Beijing News. The following is an excerpt:
China City Forum released a report on Tuesday, analyzing the overall competence of major cities in the country. The four municipalities: Beijing, Tianjin, Shanghai and Chongqing, all ranked high on the list. They have another point in common. They all got negative marks for their high costs of living, dragging them down the list.
High property prices have become an obstacle for the overall competence of the cities.
Of course, property prices do rise when a city witnesses an economic boom.
Properties close to Wall Street are expensive because the neighborhood is a cluster of world-class financial institutions. But before this financial center emerged estate prices weren't unusually high.
When a city's property prices hike beyond the level of local economic development, it makes the city much less appealing to its residents, investors and migrants.
The people with relatively weaker capability to withstand the pressure of high estate prices are the migrant workers. If they are forced to leave the city because it is too expensive, the processing enterprises or other labor-intensive industries in the city may soon see a shortage of hands. And the local economy may suffer, at least temporary, stress.
High estate prices may also drive away potential commercial investors.
The competence of a city depends on multiple elements, including the market, environment and information systems.
The major cities in China, like Beijing and Shanghai, are popular among investors because they have accumulated rich economic and social resources. If not checked, high estate prices could soon write off these advantages and weaken the appeal of these cities.
(China Daily September 14, 2007)
