Economists think Chinese housing prices too high

Economists at a financial forum in Ningbo city of Zhejiang Province said China's housing prices are still high, and that the warming up of the property market has mainly been due to capital influx.

Cheng Siwei, an economist and former vice chairman of the standing committee of the National People's Congress, said China's financial system has suffered less from the global financial crisis than those in developed countries. He pointed out that Chinese banks lack innovation so they have relatively low risk exposure. He added that the whole banking system has enough liquidity.

Cheng Siwei said that bank credit extensions in the first quarter represented about 90% of the annual target. Some of this capital has been channeled into stock and real estate, so the markets are seeing a temporary rebound. He also said that despite the real demand, some are buying property for investment, causing housing prices to surge. He also warned of the negative impact of fast growing bank loans.

China View reported that at the forum, Gao Qinghui, an economist at China Information Center, said recovering property prices in the past few weeks indicate a bubble is forming in the sector.