The jump in China's money supply is directly related to aggressive bank lending in the first half of the year. In the past six months, Chinese banks lent out 7.37 trillion yuan. And this massive amount of loans is fueling property demand and driving home prices higher.
As we discussed two weeks ago on July 7, Chinese demand for homes remains high because they view real estate as an investment. So with Chinese banks shelling out loans, many Chinese took the opportunity to purchase a home or a second home. In fact, demand is so strong that Chinese are even lining up to buy condos.
As a result, home prices have moved significantly higher this year. In June, the Chinese government noted that home prices increased in 70 major Chinese cities. New home prices leapt 6.3% in June from a year earlier and 1.1% from May in China's medium and large cities. Now, new homes are averaging around 6,554 yuan, or $959 per square meter.
And with the Chinese government continuing to pump funds into the financial system, we can expect to see China's real estate sector continue to recover in the third quarter and home prices continue to rise. That's a move that I hope you're taking advantage.
When we talked about real estate two weeks ago, I mentioned investing in two Chinese companies directly in-line to profit from China's red-hot real estate sector:
Since then, shares have pushed higher… up 21% and 10%, respectively.
I don't want you to miss out on the next 10% to 20% move higher. Every city that I visited on my recent trip to China revealed the real estate boom happening there. And I think the best way to take advantage of it is by investing in the two companies mentioned above.
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