Chinese Property Too "Frothy", Says Bloomberg

Investors should really, or rather drastically, cut their stakes in China's property market and related industries, according to Bloomberg. Louis-Vincent Gave, CEO of Marshall Wace GaveKal Asia Ltd., was quoted saying “There's no doubt that the real estate in China, it is getting to very frothy valuations, because there's so much policy risk at this stage, you need to maintain a very diversified portfolio.” According to Bloomberg, property prices in China rose 9.1% in this past September from a year earlier, lessening the need for government intervention in prevent asset bubbles in the fastest growing major economy in the world. Down payment requirements have been tightened since April, suspended loans for third-home purchases and trials have been pledged at a speedier pace nationwide. There is also a need for the reduction in social tensions that could arise from increasing home prices, Gave said. “Right now the risk in the housing market is in terms of capital allocation,” Michael Klibaner, head of China research at Jones Lang Lasalle Inc., the world's second-largest commercial real estate broker, “What happens when Chinese investors have other things to do with their money?”