The End Of Crazy China Real Estate
Xinhua reports on Hong Kong. “The government curbs and the U. S. Fed’s tapering have cast a pall on Hong Kong’s housing market, dampening demand and dragging transactions to a 23-year low. Amid the waning demand, some developers started offering new flats at 10 to 20 percent below those in the secondary market. In one example, Sun Hung Kai Properties last month sold flats at its Riva development in Yuen Long at 7,600 to 12,400 HK dollars per square foot, up to 45 percent below list prices when the project was first launched in March last year and also 15 percent below second hand home prices in the area.”
“The secondary market didn’t fare well, neither. ‘In the secondary market, it was a much weaker picture, as falling new flat prices attracted customers to the primary market,’ said Wong Ching-yi, deputy chairwoman of the Midland Holdings. She said that six real estate brokers competed for one deal in 2012. Last year, more than 10 brokers scrambled for one deal. ‘The situation will become even worse this year,’ Wong added.”
CNTV on China. “Chinese mega cities housing turnover has shown a sharp fall in recent months. Some property developers are adopting a variety of new marketing strategies, including offering major discounts to attract home buyers. Some projects in Fangzhuang, Yizhuang and Tongzhou offer an online discount of as much as 50 percent, said Cai Hongyan, president of Real Estate Media Group.”
The Beijing Review. “Despite the housing supply mounting up, homebuyers seem to have gradually lost their enthusiasm and the market has begun to calm down. In Wenzhou of east China’s Zhejiang Province, housing prices have declined for 31 consecutive months, down 31 percent from the highest recorded level. ‘A sharp rise in housing prices always has something to do with speculation,’ noted Qiu Baoxing, Vice Minister of Housing and Urban-Rural Development, saying that what has happened to China now partly resembles the situation in Japan in the 1980s when market participants ranging from large enterprises to vegetable vendors jostled to have a finger in the property pie.”
“‘People tend to believe housing trade is the most lucrative business. As a result, capital and human power keep flocking to the real estate sector, which exerts a crowding-out effect on the real economy,’ said Qiu.”
From Forbes. “Developers in Hangzhou are now offering deep discounts, and investors and owners are noticing. And not just in that city. ‘It seems that the 30% price cut in Hangzhou really changed the way Chinese people think about real estate,’ writes Anne Stevenson-Yang of J Capital Research, ‘and I doubt there is any turning back from here.’”
“‘The banking system and the shadow banking system are becoming concerned about exposure,’ says David Cui of Bank of America. ‘Once people refuse to provide credit to developers, their balance sheets will be under pressure, forcing them to cut prices. Once enough of them cut prices, fewer people would buy because most people buy property only when they think the price is going up.’”
The Global Times. “Since March, 20 property developers in Guangzhou have been offering ‘zero down-payments’ to attract buyers, in addition to large discounts and tax refund, the National Business Daily reported. New residential building sales volume in Guangzhou fell by 40 percent in the first quarter from a year ago, according to the report. So far this year, a total of six small to medium-sized banks have suspended mortgage loans to customers in Beijing partly due to fear of rising default risks, an online loan service provider, told the Global Times.”
Want China Times. “Many banks in cities across China have stopped offering home loans, with 25 out of 35 surveyed cities experiencing the trend, reports the Beijing-based Economic Information Daily. The banks have also adopted harsher scrutiny measures for screening home loan applications, while adjusting their interest rates higher for home loans. Observers have attributed the tightened loan measures to tense capital flows.”
“Meanwhile, figures showed that more than 70% of the cities across China have stopped extending home loans, the paper said. Some banks have replaced home loans with credit loans that demand higher interest rates, while other banks ask clients to purchase their financial products in exchange for an approval for a home loan application, according to finance-focused search platform Rong 360.”
From Reuters. “Suzhou, an ancient city in Jiangsu province 100 km (60 miles) west of Shanghai, became an industrial powerhouse, sitting at the heart of the Yangtze River Delta region that, along with the Pearl River Delta in Guangdong, drove China’s economic boom. Now it is ground zero for a painful corporate de-leveraging that has tacit government approval. One third of all loan delinquencies come from the region, and credit is getting harder to come by.”
“‘The more banks do this, the more they promote a vicious cycle, and companies are even less able or willing to repay their loans,’ said Zhou Dewen, vice chairman of the China Association of Small and Medium Enterprises.”
From NTD TV. “It is apparent that Li Ka-shing and his son are removing all their business from mainland China. In just one year, the Li family sold over 20 billion yuan of property in the mainland. Experts believe that, as Asia’s richest man, Li Ka-shing is very sensitive to China’s economic prospects. His ‘evacuation’ will influence the decisions of the rest of China’s rich. Yang Peichang, economist: ‘The Li family are the most sensitive people. They have low anticipation towards the Chinese economy first of all. Secondly, they are preparing early for possible chaos in China. This is because of the increasingly prominent social disorder in the country.’”
“Recently, real estate in first tier cities such as Beijing, Shanghai, Guangzhou’s have cut prices. The new tactics to draw customers have been displayed, such as beauty model show, hot dancing and free food. Ma Jiesen, economic commentator: ‘It is the end of the crazy China Real Estate. Low prospects are showing up everywhere. The CCP is still trying to pull up the economy by investment. However, it has become less and less efficient. This is because China’s economy is slowing down, and many drawbacks will emerge.’”
This is history in the making. And a classic parabolic collapse of a mania.
It will be, as the Chinese would say: “interesting times”
Epic top post, Ben. Thank you for this.
The biggest mania in history. Nothing is lost in the translation.
“It is apparent that Li Ka-shing and his son are removing all their business from mainland China. In just one year, the Li family sold over 20 billion yuan of property in the mainland.”
Imagine the calamity on Wall Street if Uncle Warren suddenly dumped all of his stock shares.
“Experts believe that, as Asia’s richest man, Li Ka-shing is very sensitive to China’s economic prospects. His ‘evacuation’ will influence the decisions of the rest of China’s rich.”
evac·u·ate
verb \i-ˈva-kyə-ˌwāt, -kyü-ˌāt\
: to remove (someone) from a dangerous place
: to leave (a dangerous place)
medical : to pass (solid waste) from your body
But the question I have and it occurs every time we are told what a billionaire was doing with his money. What is he doing now? Obviously, last year he saw the top and he sold out a lot of his property positions. But today, is he buying or selling? Are we learning about his actions because he is ready to buy but wants to be able to buy as cheaply as possible or has the reporter really discovered something? I want to know what Warren Buffet is doing today not what he did six months ago.
One further comment, if he is ready to buy will that mean a lot of Chinese will stop buying American property to buy Chinese property?
One further comment, if he is ready to buy will that mean a lot of Chinese will stop buying American property to buy Chinese property?
I think that they want to expatriate at least some of their wealth (and get a Residence Visa/Foreign Citizenship in the process) before the SHTF.
There are additional reasons for Chinese leaving China. The major cities are polluted / there is a cultural issue with rural citizens / there is fear of government intervention to avoid social unrest.
3 billion poor people might want to go somewhere but they’ll stay right where they are.
Is EM “mystery meat” part of your investing diet?
China GDP Gauge Seen Showing Deeper Slowdown
By Bloomberg News Apr 15, 2014 12:40 AM PT
Customers watch share prices on an electronic stock board at a security firm in Shanghai, China.
Photographer: Brent Lewin/Bloomberg
China’s loss of economic momentum in the first quarter was deeper than the most widely-cited data will show, according to analyst forecasts for a gauge that’s gaining increasing recognition.
Gross domestic product grew a seasonally adjusted 1.5 percent from the previous three months, according to the median estimate in a Bloomberg News survey ahead of data released tomorrow, down from 1.8 percent in the fourth quarter. That indicates a sharper deceleration than a median projection for 7.3 percent growth from a year earlier, from 7.7 percent.
Investors are focused on the scale of a slowdown that prompted Premier Li Keqiang to provide what some analysts dubbed a “mini-stimulus” of spending and tax relief. While the indicator suffers from flaws including the government’s failure to give details of methodology, it provides an extra tool to analyze an economy that bond-fund manager Bill Gross calls the “mystery meat” of emerging markets.
…
Speaking of mystery meat:
A couple months ago in the factory in Shanghai my Chinese coworker picked out a plastic box with four breaded deep fried balls in it for lunch. I thought they were hush puppies or something. Looked up a minute later to see a pile of bones and cartilage. Turns out they were bull frog bodies. The legs were somewhere else…presumably with someone willing to pay more.
Hideous
“Suzhou, an ancient city in Jiangsu province 100 km (60 miles) west of Shanghai, became an industrial powerhouse, sitting at the heart of the Yangtze River Delta region that, along with the Pearl River Delta in Guangdong, drove China’s economic boom. Now it is ground zero for a painful corporate de-leveraging that has tacit government approval. One third of all loan delinquencies come from the region, and credit is getting harder to come by.”
“‘The more banks do this, the more they promote a vicious cycle, and companies are even less able or willing to repay their loans,’ said Zhou Dewen, vice chairman of the China Association of Small and Medium Enterprises.”
There’s a lesson here and this lesson boils down to:
Bankers rule. If bankers loosen up then prosperity is at hand. If they tighten up then misery soon follows.
“You cant’ lose with the stuff I use.” - Rev Ike
And the best part of all this is …
(drum roll)
… all this loosening and tightening is accomplished by using OTHER PEOPLE’S MONEY.
Bahahahahahahahahahahahahahahahahahahahaha
I thought you conjured the money out of thin air Mr. Banker, to the tune of $80B a month. Of course you have been promising to conjure less for some time now.
“The new tactics to draw customers have been displayed, such as beauty model show, hot dancing and free food.”
Free cars, anyone?
Just the hot dancing would do it for me …
Capitalism=Communism It never could be a marriage, anyway you look at China is a country of constant chaos.
The rice farmers will keep plowing the fields, shake their heads, and say to themselves we should have remained isolated and let the world do what the heck they wanted?
‘High-end residential market in Beijing experienced downturn in sales volume and price in the first quarter, fresh evidence of slowdown of the red-hot housing market, said the world’s leading real estate consulting company DTZ.’
‘The average high-end housing price in Beijing dropped by 5.45 percent quarter on quarter to 49,287.77 yuan (about $8,014 ) per square meter in the first quarter. The high-end housing transaction volume in Beijing plunged by 23.85 percent quarter on quarter in the first three months.’
‘49,287.77 yuan (about $8,014 ) per square meter ‘
Isn’t that like, a China man’s chance of owning?
‘China’s financial markets seem to be signaling trouble, as a government crackdown on corruption and loose credit begins to bite and jittery local investors scramble for safety. Corporate debt issues nearly doubled from 2011 to 2013 – hit a wall this year. A cement-maker in Zhejiang canceled a $161 million offering in March; a plastic-maker had to withdraw a smaller offering; and an aluminum-maker’s bonds were put on a watch list because of losses.’
‘During China’s seemingly perpetual boom, such reversals rarely happened. It was assumed that the government would intervene to supply liquidity and control the credit boom that was fueling the country’s astonishing economic rise.’
‘What’s different now is partly that Xi Jinping and Li Keqiang, the new Chinese president and prime minister, respectively, seem to mean business about puncturing the bubble economy. Stevenson-Yang quotes a 2013 warning from Li that reforming China’s banks would be like “disarming land mines,” because they had made so many questionable loans.’
‘Despite the risks of contraction, the government has pressed ahead, squeezing not just the banks but the corrupt deals fueled by their loans. The most spectacular dragnet was reported March 30 by Reuters, which said authorities had seized assets worth $14.5 billion from family members and cronies of Zhou Yongkang, the former chief of domestic security, arresting or questioning over 300 of his allies and staff.’
‘This crackdown is a laudable attempt to deal with the culture of greed that has accompanied the Chinese boom. But it appears to be triggering panicky behavior by some of China’s nouveau riche, who are rushing to sell assets in a market where cash is suddenly scarce, continuing a process of capital flight that Chovanec estimates has totaled $250 billion annually in recent years.’
I liked this line:
‘During China’s seemingly perpetual boom, such reversals rarely happened’
“authorities had seized assets worth $14.5 billion from family members and cronies of…the former chief of domestic security, arresting or questioning over 300 of his allies and staff.’
I would like to understand better how reform has entered into the agenda of a corrupt government.
‘Loss-making shipping company Nanjing Tanker Corp will be delisted from the Shanghai Stock Exchange after a five-day grace period, the bourse said over the weekend, marking the first time a company backed by the central government will be dropped from a domestic exchange.’
‘According to Reuters calculations based on exchange data, around 90 firms have been delisted from the Shanghai and Shenzhen exchanges since their establishment over twenty years ago. However, the Nanjing Tanker delisting is the first by a company backed by the central government.’
http://en.wikipedia.org/wiki/Chinaman%27s_chance
To an asian, “chinaman” is almost as vile a word as the n-word. Many people don’t know that and mistakenly use the word in polite society.
Duly noted. How about North Korea? How can I slur them?
‘China has issued stricter guidelines governing trust firms, two sources with direct knowledge of the rules told Reuters on Monday, in a bid to counter systemic risks posed by the biggest players in the country’s shadow banking sector.’
‘Trust companies are non-bank lenders that raise funds by selling high-yielding investments known as wealth management products (WMPs) and use the proceeds to fund loans to risky borrowers such as property developers, local governments and others to whom banks are reluctant to lend.’
‘The new rules from the China Banking Regulatory Commission (CBRC) aim to reduce liquidity risks associated with off-balance-sheet WMPs by forbidding trusts from operating so-called fund pools that enable them to fund cash payouts on maturing products with the proceeds from new WMP sales.’
‘Regulators are concerned that liquidity problems with a single trust product has the potential to ignite systemic risk, said a trust industry executive who has seen the document. He said the document signals that liquidity risk will be a key focus for regulators this year.
“Fund pools” refer to pools of cash and credit assets from various different WMPs that banks and their trust company partners maintain.’
‘Regulators have increasingly focused on such structures over the last year, targeting the liquidity risk posed by the practice of using proceeds from the sale of new WMPs to finance cash payouts on maturing products. China’s securities regulator has compared this practice to a “Ponzi scheme.”
http://en.wikipedia.org/wiki/Dragon:_The_Bruce_Lee_Story
‘A crackdown in China on financing backed by commodities risks unleashing a flood of iron ore sales from tens of millions of tonnes of the raw material sitting at Chinese ports, raising the prospect of a renewed price slump.’
‘Investors who have raised funds against mostly unhedged iron ore could be at risk in the event of a price fall due to sluggish steel demand, leading to forced sales as banks wind back loans against the raw material, analysts and traders warned.’
‘Iron ore port stocks stood at a near record above 108 million tonnes last week, enough to build almost 1,200 New York Empire State buildings. Beijing’s credit tightening has spurred investors desperate for cash to turn to iron ore. Industry sources familiar with the practice estimate some 30 million tonnes or $3.5 billion of stocks are now tied up by financing.’
‘Unlike copper, most of the iron ore at the ports is not hedged, meaning those raising money against it are unable to lock in a price and remain exposed to any price fall, increasing the risk of a forced sale. Chinese mills and traders also operate on narrow margins and are unused to paying to fully hedge their positions, added a Shanghai-based trader whose company has never hedged its port stocks.’
“Since cash is tight, we don’t have extra funds to hedge our position in the futures market,” he said.’
‘Chinese importers have defaulted on at least 500,000 tons of U.S. and Brazilian soybean cargoes worth around $300 million, the biggest in a decade, as buyers struggle to get credit amid losses in processing beans.’
‘Three companies in the eastern province of Shandong had defaulted on payments for shipments as they were unable to open letters of credit with banks, trade sources said on Thursday.’
‘A string of defaults on loans, bonds and shadow banking products in recent weeks has highlighted rising credit risks in China, partly fueled by signs the economy is slowing.’
‘The reality is that the world is reliant on Chinese imports of soybeans to maintain this price strength,’ said Luke Mathews, commodities strategist at Commonwealth Bank of Australia in Sydney. “It is putting a question mark on the sustainability of these prices.”
Interesting, aren’t transaction like that handled with an escrow account (letter of credit)? I presume that by “default” they mean that soybeans were delivered but not paid for.
If you don’t send the letter of credit, the beans do not get shipped. Otherwise, a bank guarantee wouldn’t be involved.
Why don’t they just call the London trading desk of AIG and buy a credit default swap for 1.5 cents on the dollar.
Oh, wait, that was already done with sub-prime mortgages and that did not work out so well!
Fairfax, VA Housing Prices Crater 13%; Inventory Balloons 58%
http://www.movoto.com/fairfax-va/market-trends/
‘That high-powered professional men have illicit affairs is not an uncommon occurrence anywhere in the world. However, whereas an affair might be a secret elsewhere, Chinese men support multiple women, in part, to flaunt openly their wealth and social status.’
‘Real estate was a hot investment for the moneyed of China, but as the market cooled down in many cities, flats were left empty. As such, they were perfect vessels to house the mistresses of wealthy men. Hair and nail salons, foot massage parlors, boutiques, and coffee shops sprung up near housing estates popular with the mistresses, supported by cash that came from apparatchiks and executives elsewhere in the country.’
…. and low demand for Ho Fun.
It long has been rumored that a female star of “Crouching Tiger, Hidden Dragon” received $1 million for a liaison with Bo Xilai. The actress has denied it.
In terms of the corruption and venality practiced by its elites, China appears to be approaching the standard set by a particular period of ancient Rome.
Haven’t concubines been part and parcel of Chinese culture for millenia?
That article is remarkable. Here’s more:
“In a country where only 80 baby girls are born for every 100 baby boys, young available women are perceived as a rare commodity, and hence are hoarded by the affluent.
It is illegal in China for a government official to keep a mistress, yet this has not tempered the trend.”
What is the PRC’s policy on repatriation of foreign born ethnic Chinese?
I don’t know. But any culture where housing and women are reserved for the affluent is going to blow up violently.
Salinas, CA Housing Demand Dives 23% As Buyers Disappear
http://www.zillow.com/local-info/CA-Salinas-home-value/r_54288/
San Diego, CA Housing Prices Dive 5% YoY; Inventory Explodes 68%
http://www.movoto.com/san-diego-ca/market-trends/
Where are those all-cash Chinese investors when you need them?
‘A report by Shanghai and Hong Kong-based global property portal Juwai, which is in Mandarin and was founded by two Australian businessmen, shows Newcastle is beaten only by the Gold Coast as the hottest investment city.’
‘Spokesman Dave Platter said while Juwai could not release the number of searches on each city for competitive reasons, anecdotal evidence suggested the Chinese interest was leading to real investment.’
‘Mr Platter described Chinese investors as the “best friends” of first-time homebuyers because many new projects would not get off the ground without them. “For years, developers have complained that they can’t build new developments because they need a certain number of off-the-plan pre-sales before they can get financing to commence construction - Chinese buyers are like money in the bank for developers,” he said.’
‘Mr Platter said Housing Industry Association reports showed that housing affordability was better now than it had been in 12 years and if housing cost too much, a lack of supply was to blame.’
“Compared to major Chinese cities like Beijing or Shanghai, it’s shockingly inexpensive to buy a home in Newcastle, which has a good educational system, as well as a good university,” he said.’
Snapping up sweet dealz in Stockton?
…soon to be marked to Modesto….er…. marked to Market.
‘With recent signs that housing may be slowing down a bit, Nobel Prize-winning economist Robert Shiller told CNBC on Tuesday that he’d still describe the recovery as strong. “I think this boom we saw in the last year and a half in home prices has something to do with quantitative easing and the record low mortgage rates,” Shiller said.’
“The way prices have been increasing since the spring of 2012, it [looked] like a no-brainer to get into the market for a while,” he continued. “[But] now there are signs of softening” in building permits and housing starts.’
‘Shiller cautioned that he didn’t want to be an alarmist-saying home prices are “kind of at a normal level” right now. He added: “My son just bought a house. I told him, ‘Fine.’”
‘As for housing prices in years to come, “the futures market at the CME is predicting something like 25 percent higher home prices in 2018,” the co-founder of the Case-Shiller Home Price Index said. “That seems like a possibility,” he added.’
Last month:
‘Robert Shiller might know he is hot in China, but he probably doesn’t know just how hot. At the second Nobel Economists Summit of China, which he attended over the weekend, he seemed overwhelmed by the number of questions thrown at him - along with the occasional request for an autograph - from journalists who usually try to be seen as professional.’
‘But he apparently still was not prepared for the type of questions he encountered. He is better known in the Middle Kingdom for his undisguised doubts about the country’s skyrocketing home prices. So, during the question-and-answer period after his speech, he was asked: “Do you think China’s property market will collapse?”
‘As on previous occasions, Shiller again cast doubt on the high-rising prices and said there is a possibility for the bubble to burst. But unlike media reports that portray him as a resolute Dr. Doom, he did not hide his uncertainty about the issue.’
‘And as a serious economist, he did not conceal his unwillingness and inability to predict the future, though he is known for publishing the famous book Irrational Exuberance just before the Nasdaq tumbled from its peak in 2000.’
“I find it difficult to forecast these things (whether home price will fall). I don’t know how to forecast when such things will happen,” Shiller confessed.’
He really is soiling himself. And of course he goes to China and gets treated like a celebrity. No economist should be a celebrity! It would be an interesting irony if he contributed financially to his son’s down payment.
I bet he bought a good chunk of his son’s house outright.
And I’ll wager they didn’t pay more than $40/sq foot for it.
Notice he didn’t mention what he paid?
Wall Street Journal: Housing Inventory Remains Spacious
http://blogs.wsj.com/economics/2013/11/06/vital-signs-housing-inventory-remains-spacious/
With tens of millions of excess empty houses and demand at 20 year lows, what did you think was going to happen to housing prices?
‘As part of its plan to move tens of millions of people out of the countryside, China is building hundreds of brand-new cities. Tianjin Eco-city is a relatively successful example, but many of its ‘green’ buildings still echo like gymnasiums.’
‘Many other ambitious eco-city projects – including Hebei province’s Caofeidian, once considered the crown jewel of the movement – have ground to a halt. The problem, says Mars, is the “new city model” – the goal of building a whole city from the ground up rather than letting it develop organically. “You can want to design your urban landscape, but in reality, on a fundamental level, that’s impossible,” he said. “We have to acknowledge that it’s extremely hard to build a regular city from scratch.”
‘At present, the Tianjin Eco-city feels more like a simulacrum of a viable community than the real thing. Its buildings are designed to the world’s most stringent environmental standards, but they stand mostly unused. Over the past year, Ho Tong Yen, chief executive of the city’s master developer, says the project has made strides, selling about 400 housing units a month.’
‘On an official city tour, assistant public relations manager Gang Wei walks through a sparkling – yet unoccupied – glass-and-steel office building, enumerating its environmental advantages. Yet while the developer claims that more than 1,000 companies have registered in the city, many storefronts on its main shopping plaza stand empty; two frozen escalators lead to a mostly-vacant upper floor. In the middle of the afternoon its few occupants – a noodle joint, a coffee shop, a Japanese restaurant advertising “suisi”– are padlocked. Although the city’s first food market opened last November, it’s still limited to a few well-stocked produce stalls. The massive space echoes like a gymnasium.’
‘The air reverberates with the thwacking sound of a pile driver. It is a familiar sound in Tianjin. With support from the central Chinese authorities, the municipality has shaped its outlying areas into an endless sprawl of showcase projects. Beyond the eco-city lies an ersatz ancient town, a free market zone with its own football team, and a half-built financial centre which, according to its developers, will someday rival Manhattan. Construction is everywhere; people are scarce.’
Bought a new pair of Cole Hahn shoes yesterday. They had been made in India.
China is moving up to higher value added products:
http://www.rigzone.com/news/oil_gas/a/132564/China_Inc_Joins_the_Big_League_in_Oil_and_Gas_Services
At present, the Tianjin Eco-city feels more like a simulacrum of a viable community than the real thing
Cargo cult?
Nothing green about waste of resources.
“Mortgage Originations Plunge To Lowest On Record”
http://www.zerohedge.com/news/2014-04-07/mortgage-originations-plunge-lowest-record
Collapsing demand is what happens when prices go to grossly inflated levels.
“Mortgage Originations Plunge To Lowest On Record”
Not to worry. Just remember and keep repeating to yourself these simple words:
REAL ESTATE ALWAYS GOES UP.
China News
China Holds Its Breath As Property Balloon Deflates
By Bob Davis and Esther Fung
Updated April 15, 2014 10:06 a.m. ET
CHANGZHOU, China— Wu Xuesong, a professor in this city on the Yangtze, says he doubled his money on an apartment he bought as an investment some years back and is ahead on a second.
Buy a third? Forget it.
Mr. Wu slides open a dining-room window and points to the dark shadow of a new apartment complex, where only a handful of lights are on. “No one lives there,” he says. “That shatters my confidence” in China’s long-thriving real-estate market.
Economists have worried for years that China is setting itself up for a housing-market bust. In big international cities like Beijing and Shanghai, prices continue to rise. But evidence is mounting that in dozens of third- and fourth-tier Chinese cities rarely visited by foreigners, overbuilding is out of control and a major property-market slowdown is now under way.
The 200 or so Chinese cities with populations ranging from 500,000 to several million account for 70% of the country’s residential-property sales. In many of these cities, developers are slashing prices and offering freebies such as kitchen furnishings and parking spaces as they try to work through vast gluts of unsold property. Protests are breaking out among buyers angry that their investments are losing value.
Data in some of these smaller cities is scarce. But in 100 cities tracked by Nomura Holdings Inc., 42% of those classified as Tier 3 and Tier 4 saw housing prices decline in March from February. Home construction in such cities is racing well ahead of population growth, says Beijing research firm Gavekal Dragonomics, as developers continue to build new projects without buyers.
A dramatic housing collapse such as the U.S. suffered a few years ago isn’t thought likely here. Chinese families don’t borrow as heavily for home buying as Americans, putting at least 30% down. China doesn’t have sketchy mortgages like those that infected the U.S. market at its peak, nor home-equity loans that let owners finance shopping sprees on the value of their homes. Chinese financiers haven’t put together arcane mortgage-backed securities such as those that blew up in the U.S.
…
Jiminy cripps…… Its the same false narrative. It makes one wonder what kind of BalloonHeads are penning this tripe.
happens every spring
housing prices decline in March from February.
Seasonally adjusted prices decline Feb and march every year? Really?
It’s just the warmup for the red-hot spring sales season. Real estate can only go up from here.
So the truth is actually being reported about the housing lies in China.
Stock investors get ready to make some money.
And The HBB reports the truth about housing lies in the US.
The big question is how long the subsequent U.S. recession will last. Probably U.S. housing will not be greatly affected to the downside over 1 year in duration.
Keep telling yourself that.
Housing Analyst, do you rent or own? If you rent, do you ever intend to buy? What would precipitate buying?
If you own, are you thinking about selling? Holding on?
thanks!