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World

China's new property fever spreads to ghost towns

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World

China's new property fever spreads to ghost towns

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COMING UP:China's new property fever spreads to ghost towns

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00:00:02
>> China's notorious property problems coming full circle as investors try to get in on what could be the next big boom. After a year of volatile stock markets, people are looking for new places to make a quick buck, away from the saturated hot spots like Beijing and Shanghai.
00:00:18
That's got buyers swarming inland toward the so-called ghost towns, eyeing up empty leftovers from an earlier building frenzy as a way to get on to the property ladder. Reuters Yawen Chen reports from the second tier city of Zhengzhou.>> Zhengzhou's East District has always been regarded as one of the symbols of ghost towns in China.
00:00:37
But recently, it has been booming as one of the most expensive areas in Zhengzhou. For home buyers in Zhengzhou, it's not even a matter of money anymore. They have to be here early to be able to get a number so that they can be in this lottery system where homes are going to be sold in two minutes.
00:00:55
Many people are panicking because they fear that they will be left behind in this new race to grab houses in Zhengzhou.>> The spending spree is fueled by the central bank pumping credit into a slowing economy, providing an accidental solution to the housing glut that created the ghost towns in the first place.
00:01:12
It's good news for investors, but risky business for Beijing.>> China's new loans are mainly made of residential loans, which means people are borrowing more and more to buy houses. And that's posing increasing risks for banks and policy makers. How to balance economic growth and the rising asset bubble will be an increasingly challenging task for the Chinese government.
00:01:36
>> Across the country, second tier cities are flickering with new life with house prices up as much as 40% from a year ago. But with home loans edging towards the breaking point of the subprime crisis a decade ago, many are worried this new boom may all be built on a house of cards.