Will the Property Market in Hainan Cool Down?

After China revealed a plan to build its tropical island of Hainan into a top international tourist destination earlier this year, the news injected great energy into the local property market. Will soaring housing prices, which members of China's top advisory body have pointed out, hinder the process? Our Liaojibo has more.

Seaside View is a newly-built estate in Hainan's coastal city of Sanya, located near the beach.

From its windows, one can get a full view of the sea and enjoy the warm sunshine. Its ideal location and the news that Hainan is poised to become an international tourism island have combined to push the opening price of this estate way beyond people's expectations. A salesperson says:

"The average price of this estate is 80-thousand yuan, or nearly 12-thousand U.S. dollars, per square meter, and will continue to rise. If you want to buy, you should pay it off at one time."

But the incredibly high housing prices haven't prevented people from buying. Home buyers from all over the country have flocked to the island, hoping to earn money on their investment.

"I think the housing prices in Hainan will continue to rise because it's an international tourism island."

"I hope my investment will bring me some benefits. If I don't buy one now, I'm afraid the prices may rise."

"Money is not a problem for most investors. What they are concerned about is whether there's a house left for them."

However, the rocketing prices seem a nightmare for local residents. Twenty-four-year-old Wu Tuan experiences the effects of this heated market.

"Now I can't even pay the down payment, let alone buy one without a bank loan. I think most wage-earners like me couldn't afford to buy a house."

Official data shows that the average housing price in Sanya has reached 20-thousand yuan per square meter, nearly twice last year's price. Is there a bubble in the property market? People hold different opinions on the question: Li Honghai, director of the Sanya Housing and Urban-Rural Construction Bureau, says there is no bubble at all.

"There could not be any bubbles. Since China's reform and opening-up, people's lives have improved and they have saved some money. It's good to see that they'd like to invest in Hainan, and the supply and demand for housing here is balanced."

However, Chi Fulin, executive director of the China Reform and Development Research Institute, disagrees:

"The Hainan international tourism island is attracting many investors. However, we haven't made medium- and long-term development guidelines and haven't carried out effective plans yet, which has led to soaring housing prices and bubbles in the property market."

But Chi Fulin also notes that the bubble is only a short-term phenomenon and he is optimistic about the future development of Hainan.

"Hainan will make policies to guide investors to transfer short-term investment into medium- and long-term investment. As the housing prices will cool down, I suggest home buyers don't rush in at this moment. The government will also strengthen its management of the tourism market, thus creating a healthy environment for the development of Hainan Tourism Island."

Officials from the provincial government say they have already made plans to provide more than 100-thousand units of affordable housing for low- and middle-income families. Policies designed to curb the soaring property market are also on the agenda.

Liao Jibo, CRI news.