China's real estate market is booming, with Shanghai home prices up 20% to 30% this year alone. But some wonder whether the housing market can keep rising.
>> I like this area, so the --
>> Terry McCarthy: She loves it. He thinks the three-bedroom apartment at nearly 500,000 dollars is overpriced.
>> foreign language
>> Bill Yu, a software designer, and Lydia Wong, a TV producer, have a new baby and are looking for a bigger place. But unlike the U.S., China has dodged the recession, and property prices are soaring.
>> foreign language
>> In Shanghai, according to this realtor, this year, they've already gone up by 20 to 30 percent.
>> foreign language
>> Yes, he says, it's a little bit crazy. foreign language So crazy that ordinary people are struggling.
>> We think we are kind of middle class in China. If the people like us cannot buy a property, who can buy it? Only the bosses or rich people can do it.
>> With the stock market up 70 percent this year, there are plenty of rich people around. Shanghai is China's version of New York City, a center of finance and entertainment where everyone wants to live. Predictably that's driving real estate prices sky-high. Although average Chinese incomes are less than one tenth of what they are in the United States, an apartment in this downtown complex will cost you 5 million dollars. Chinese have one of the world's highest savings rates, but have only been allowed to buy their own homes in the last ten years. Money has flooded into property. The authorities know the risks of a bubble and a U.S.-style crash, so they regulate.
>> The Chinese government has been very, very conservative when it comes to lending. If you're a first-time home buyer, you have to put at least 20 percent cash down. If you're an investor, the minimum is usually about 40 percent.
>> Foreclosures? Almost unheard of.
>> China's situation is different, still not totally free capitalism market, because the government has some invisible hands behind, behind.
>> Sometimes not so invisible.
>> Yeah, yeah, yeah, that's right, that's right. laughter
>> The Yu family are going to wait to buy because they think prices will come down this winter somewhat. Nobody thinks Shanghai will ever be cheap. Terry McCarthy, CBS News, Shanghai.
==== Transcribed by Automatic Sync Technologies ====
© 2009 CBS Interactive Inc. All rights reserved.
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