Home Price to Income Ratios Show Housing Still Unaffordable in Top Tiers

The income to price data is a bit old, but year-on-year prices are climbing faster that wages in many top cities.

As shown in Figure E-House Real Estate Institute before "35 cities nationwide price earnings ratio list" list, Shenzhen, Xiamen, Beijing rushed into the top three, 35 cities the average price earnings ratio of 8.7. It is worth noting that in 2014 the country 35 cities ranked in the price earnings ratio, price earnings ratio of Shenzhen more than 20, ranked first, followed by Xiamen, Beijing, Shanghai, Guangzhou, Hangzhou and Fuzhou, a few cities, price earnings ratios reached 15.5,14.5,11.9,11.8,10.8 and 10.8. Shenzhen, for example, his price earnings ratio of 20.2 in 2013, Shenzhen's price earnings ratio is still only 18, has now soared to nearly 22.2, which means that in Shenzhen, a city reach average level of family income, if the purchase of a Suite 100 square meters of ordinary commercial housing, in fact, to spend 20 years to get what you want.

The article says a number above 6 indicates a bubbly conditions in developed markets.

China's wealth and income disparity doesn't make average salary the best tool, but a quick interpretation of the data is that third- and fourth-tier city homes are affordable, but few want to buy because prices are falling (supply exceeds demand). First- and second-tier homes are unaffordable and rising in price because prices are rising (demand exceeds supply). Developers are already losing money in some third- and fourth-tier cities:

From now, the national property market differentiation is still evident after large stockpile of some second-tier cities and the four-tier cities, inventory is still on the rise this month, a large housing prices nationwide marketing official pointed out. "Housing sales prices are market-oriented operation, if the stock can not be clearing, then the developer must have been long concession, and now even some of the four-tier cities are already selling at a loss, basically no room for price cuts."

iFeng: 2016年房价是否会降价 降到老百姓买得起？