China's property market remains dangerously overheated and failing to tame the speculative bubble could threaten financial and social stability, a prominent economist said in an official newspaper on Friday.
Yi Xianrong, an economist at the Chinese Academy of Social Sciences, a government think tank in Beijing, noted estimates from electricity meter readings that there are about 64.5 million empty apartments and houses in urban China, many of them bought up by people wagering on a constantly rising property market.
In the overseas edition of the People's Daily, Yi said the "shocking" level of empty housing showed the dangers brought by the country's property boom, which the central government has been trying to cool.
"If this outsized property bubble does not burst, it will hurt residents' well-being, and also affect national financial security and coordinated national economic development," wrote Yi.
He wrote that the overheated property market was creating "misallocation of resources, price distortions, squandering of wealth...and is magnifying national financial risks, so that the economic structure cannot be adjusted, ultimately leading to overall social instability."
The People's Daily is the main newspaper of China's ruling Communist Party, and the overseas edition is a small-circulation offshoot that tends to be more forthright than the main, domestic edition. While the paper is not an unerring mirror of official policy, Yi's commentary suggests that the real estate market remains a worry for policy-makers.
Beijing announced a slew of measures in past months to cool the property market, including raising down-payments and mortgage rates, and that has already caused deal volumes to drop and property inflation to slow in many cities.
Nationwide, property prices rose 0.2 per cent in May from a month earlier, and were 12.4 per cent higher than a year earlier. The increases were smaller than in April.
Property prices will fall within a few months as government steps to cool the real estate market bite deeper, Xu Shaoshi, the minister of land and resources, said on Sunday.
Yi suggested that more robust steps are needed to beat back property price rises fueled by speculation.
"The problem now is that investment in the domestic property market has completely overturned China's traditional concepts of wealth management and investment and its price formation system," he wrote.