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Reading Comprehension Quiz for IBPS PO & IPPB Exam: Why China’s housing market is in frenzy?

Oct 14, 2016 16:25 IST

    English is the most important part in banking exams where you face questions in the English section from passages taken from leading dailies in English such as The Times of India, The Hindu, The Economic Times etc. In order to prepare you for that, the banking team of Jagranjosh.com, the best ever website for banking preparation, is bringing to you passages from these papers and questions on those in the recent pattern so that guide you in your preparation. This is a passage from ‘The Business Line (dated October 11, 2016) for Reading Comprehension questions. Go through it to give your preparation a boost.

    Question (1-10): Read the following passage and answer the questions that follow. Some words / phrases are printed in bold in the passage in order to help you locate them while answering some of the questions asked.

    Over the past year, there has been a dramatic rise in prices of residential property in many cities in China, especially in some of the large metros. This comes after a period just before, when everyone was talking about the “softening” of the Chinese real estate market as the authorities sought to clamp down on what they believed was speculative activity that was leading to excessively high prices and making housing unaffordable for many ordinary Chinese. But since then — and really from early 2015 — prices seem to have gone completely berserk, increasing at unprecedented rates.

    The biggest increases were in the Top 4 metros (Beijing, Shanghai, Tianjin and Chongqing) but many other cities have also showed very rapid increases. Data indicates that from April 2015 to August 2016 (16 months) average prices in the Top 4 metros increased by 24 per cent and those in 27 other cities increased by 14 per cent.

    This certainly suggests something approaching a bubble, especially as house prices were already seen by many as being far too high even before the recent surge. According to official data, the house price to average income ratio was 9.2 at the end of 2015; and since then prices have increased even more dramatically than before. However, not all cities show the same trend, and even among the Top 4 metros there have been significant differences. The most dramatic increase in prices has occurred in Shanghai, with new house prices there going up by more than 40 per cent in the 16 months to August 2016. Beijing follows with a 30-per cent increase, but the increase in Tianjin has been more moderate at 21 per cent. Most remarkably, prices in Chongqing have barely increased at all over this period, despite the apparent frenzy in residential real estate markets in general.

    Clearly, it is not only macroeconomic policies such as interest rates, banking and financial regulations and so on, that are at play here. Such sharp regional variations suggest that there are specific factors affecting particular cities more than others, and that authorities in some municipalities have been better able to control residential prices even through this more generalized bubble.

    Indeed, in recent weeks, some other local governments in other cities have moved to institute regulations to curb house prices. The municipality of Hangzhou this week brought in rules that require purchasers of high-priced land at auctions to pay the entire amount within a month, so as to reduce speculative activity by developers and others. Nanjing in Jiangsu Province became the fourth city to limit those without residence permits to a single ownership and disallow more than two properties even for those with resident status.

    Interestingly for a country ruled by a communist party, the home ownership ratio in China is now one of the highest in the world, at nearly 90 per cent compared to around 64 per cent in the US and the UK, for example. This is largely because the Communist Party allowed residents to buy their homes at prices that were steeply discounted relative to market value.

    Thereafter, there has emerged a flourishing market particularly for urban real estate and particularly for residential housing. Most of this relates to apartments rather than standalone homes (or “villas” as they are referred to in China), and the market is still generally driven by those who wish to reside in their own homes, mostly in newly constructed apartment buildings.

    The pace of urbanization has assisted in the continued demand for residential housing. While the sheer pace of price increase may appear to suggest a strong speculative element, it is not necessarily driven only by financial players and “land kings” who are real estate dealers interested in capital gains, but by individual buyers and potential occupiers. It has been estimated, based on data collected by sales managers across the country, that in the past three years less than ten per cent of buyers were investors.

    1. Which among the following is true regarding the recent surge in prices of houses in China as mentioned in the passage?

    1. There has been a meteoric rise in prices of houses in the metro cities of the country whereas for other cities there is no sign of prices seeing a change
    2. There has been a rise in the prices of housing properties in China all over the country and that also differently for different cities
    3. There has been a steady increase in the prices of housing properties in China in the recent years but this has only been significant for rural areas
    4. There has been no change in housing property prices in China in the recent years
    5. Other than those given in options

    Solution: Option (2)

    Explanation: According to the given passage, the price rise in the real estate sector of the country has been very steep in the recent years and that applies for properties situated in all over the country whereas for individual cities also, the increase in prices has been different. This trend has been presented in option (2) among the given options and that is why, it is the right choice.

    2. Which among the following best explains the location specific change in real estate prices in China in the recent years?

    1. China has seen price rise in smaller towns in the recent months but for the big cities, it has been the same more or less
    2. China has seen the price of real estate properties increasing mainly in hinterlands because of the space available there
    3. China has seen steep increase in real estate prices for both metro cities and smaller towns similarly almost at the same level
    4. China has seen increase in property prices in metro cities more compared to the same in the comparatively smaller towns
    5. Other than those given in options

    Solution: Option (4)

    Explanation: According to the given data in the passage, the metro cities in China have seen a jump in real estate prices to the tune of 24 percent in the last 16 months whereas for the smaller cities of the country, the same has been around 14 months. This is represented by option (4) among the given options and that is why, it is the right choice.

    3. Which among the following is true regarding the price rise of housing properties in the metro cities of China as per the given information in the passage?

    1. There has been changes in the prices of housing properties in all the four big metro cities of China
    2. Beijing has seen an increase of around 40 percent in the prices of housing properties in the last 16 months
    3. Tianjin has experienced the lowest increase in housing property prices among the four metro cities of the country
    4. All the above
    5. None of the above

    Solution: Option (5)

    Explanation: According to the information given in the passage, Chongqing has not seen any increase in housing prices compared to the previous years and there has been no substantial change in the prices of properties in the city. Shanghai has seen a rise of 40 percent in housing prices in the last 16 months and Beijing has seen a rise of 30 percent during the same period. Tianjin has seen a moderate growth of 21 percent in the same but it is not the lowest as that holds true for the city of Chongqing which has hardly seen any increase in property prices. These make option (5) the right choice among the given options.

    4. Which among the following best explains the role of the Chinese law enforcement agencies in the recent surge in real estate prices in the country?

    1. Chinese authorizes are not aware of the recent situation in the country and they are still gathering information regarding the same from various sources before acting on it
    2. Chinese authorities have already clamped down on builders who have been suspected of illegally increasing the prices of real estate properties
    3. Chinese authorities have decided to enter into real estate market themselves and help ordinary people buy homes at affordable prices
    4. Chinese authorities do not believe citizens and that is why the prices are high with the support of the government so that only rich can afford to buy homes
    5. Other than those given in options

    Solution: Option (2)

    Explanation: The government authorities have already clamped down on the real estate builders regarding speculations and increasing the prices of properties by doing that. This has come after the prices of properties increased drastically over a very short period of time. However, after this action, the prices have further increased without any sign of decreasing in the near future. This makes option (2) the right choice among the given options.

    5. Why is it true that China has one of the highest residential ownership rate among other countries in the world?

    1. The population of China is more than all other countries and that contributes to the high percentage rate compared to other countries
    2. The data provided by Chinese authorities can never be verified from other sources and that is why, it always shows the country in a good light
    3. The Chinese authorities protect the home owners from all kinds of problems and that is why, everybody has a home in the country
    4. Chinese government has made it possible for citizens to buy homes at affordable prices as compared to other developed countries
    5. Other than those given in options

    Solution: option (4)

    Explanation: The percentage of population having a residence in China is about 90 percent which is higher than developed countries such as USA and United Kingdom. This has something to do with the discounted price at which Chinese citizens can but houses in the country when the market rate for the same is very high. This is explained in option (4) and that is why it is the right choice among the given options.

    6. Which among the following best explains the housing purchase pattern of Chinese people as per the data given in the passage?

    1. Chinese people want to buy as many houses as they can because the population problem is there
    2. Residential houses dominate the housing property market in China because people love staying in these houses
    3. Chinese people want to buy villas more in cities and residential houses more in the suburban areas of the country
    4. Chinese people are very much interested in owning a property of their own and that is why, they invest in housing properties of all things
    5. Other than those given in options

    Solution: Option (2)

    Explanation: According to the information given in the passage, Chinese people generally go for residential properties in the country as compared to standalone houses or villas since they are more interested in owning a house of their own where they can live with family. This is explained in option (2) and this is the right choice among the given options.

    7. Which among the following is similar in meaning to the word ‘speculative’ a used in the passage?

    1. Abstract
    2. Uncertain
    3. Assertion
    4. Ascension
    5. Other than those given in options

    Solution: Option (2)

    Explanation: In the given passage, the word has been used to imply that the sheer price increase in real estate property prices may be because of purposes which are uncertain and hazardous. This makes option (2) the right choice among the given options.

    8. Which among the following is similar in meaning to the word ‘institute’ as used in the passage?

    1. Enforce
    2. Accustom
    3. Customize
    4. Personalize
    5. Other than those given in options

    Solution: Option (1)

    Explanation: According to the given passage, the word has been used to imply that various local governments have enforced new regulations in order to curb the abnormal rise in real estate prices all over China in the recent years. This makes option (1) the right choice among the given options.

    9. Which among the following is opposite in meaning to the word ‘steeply’ as used in the passage?

    1. Forcefully
    2. Intentionally
    3. Gradually
    4. Greatly
    5. Other than those given in options

    Solution: Option (3)

    Explanation: In the given context, the word has been used to imply that China government has allowed the home buyers to own houses at highly discounted prices compared to the market rate. This makes option (3) the right choice as it implies slowly and not at a time and is clearly the only opposite in meaning to the given word.

    10. Which among the following is opposite in meaning to the word ‘frenzy’ as used in the passage?

    1. Harmony
    2. Calmness
    3. Soundness
    4. Perfect
    5. Impact

    Solution: Option (1)

    Explanation: According to the given context, the word has been used to indicate that the housing property market in China is going through a violent phase as of the present day and it is showing steep increase in prices making the whole industry seem like a bubble. This makes option (1) the opposite in meaning as it means there is perfect situation in the market and that is why, it is the right choice among the given options.

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