May 27, 2014

When Housing Prices Fall, Problems Will Be Exposed

The Wall Street Journal reports on China. “Pan Shiyi, the co-founder and chairman of Soho China Ltd., is taking a very bearish view on the housing market, which has struggled this year. Demand is also weakening in an expanding number of cities as banks tighten mortgage lending and sales are dampened by widespread expectations of price cuts. ‘I think China’s property market is like the Titanic and it will soon hit an iceberg in front of it,’ Mr. Pan told a financial forum on Friday, according to the China Business News. ‘After hitting the iceberg, the risks will not only be in the real estate sector. The bigger risk will be in the financial sector,’ he added.”

“He said serious problems lie with financial products like trust and wealth management products, as well as entrusted loans that charge higher interest rates than banks and are key financing vehicles for the property sector. ‘When housing prices fall 20% to 30%, these problems will be all exposed,’ he was quoted as saying.”

From Reuters. “The Chinese developer behind an eight-storey clubhouse with a billion-dollar view over Shanghai’s Huangphu River is turning to lower-end coffee shops and restaurants to fill the space, as a broad anti-graft campaign puts the brakes on conspicuous spending. Developers and owners of luxury residential property are also feeling the heat. ‘The Beijing market is particularly slow. There’s a lot of supply because people are dumping their high-end property into the market because of anti-corruption,’ said a manager of a property company who declined to be named.”

“In Beijing’s secondary home market, the number of units on sale in April doubled from January to 14,622 units, while average selling prices eased 2.4 percent during the period, according to property brokerage Midland Holdings. In Shanghai, a manager at a developer said sales of villas had been hurt as some investors were opting to go overseas. ‘It’s hard for an ordinary person to have many assets; one has to have power to generate money, and it’s difficult for him to be totally clean. These people have to protect themselves and their family so they’d rather invest overseas,’ said the manager, who declined to be identified.”

From NTD TV. “Since 2014, the Chinese property market has been suffocated with a glut of real estate inventory, sluggish sales, and a sharp drop in transaction volume. The market is awash with various promotional activities. Recently, ‘Zero Down’ was launched in Beijing. In the Greater Beijing area, lower-cost promotions were also heavily promoted recently. Prior to May 1, developers in Guangzhou also advertised slogans such as ‘Move in with zero down payment.’”

“Duan Shaoyi, Beijing Normal University MBA instructor and economic columnist: ‘It is the eve of the real estate bubble burst, many people are aware of it. They are hoping that the promotion will push up sales and reduce the losses in the future bubble burst. My advice is to sell the house as soon as possible. In the place where I live, 70% of the houses are occupied by mice, 20% by house nannies, and only 10% by the real owners.’”

Want China Times. “More than 30 Chinese cities, excluding Beijing, Shanghai, Guangzhou and Shenzhen, plan to relax restrictions imposed on housing purchases because of the slowdown in the country’s real estate market. ‘The housing market in China is not just slow but cold. If the downtrend continues, risks will be posted in the market,’ said an executive from a major real estate developer, adding that agencies might go out of business if the trend continues.”

“The trend of bankruptcies in Wenzhou continues unabated, according to a study conducted by the Chinese-language Economic Information Daily, while restricted lending to enterprises has made matters worse. It is understood that Zhejiang courts processed 346 cases of bankruptcy in 2013, up 145% from the previous year, and the total debt of the bankrupt enterprises amounted to 159.5 billion yuan (US$25.6 billion), nearly six times the 24.3 billion (US$3.9 billion) in 2012. Of these, the number of businesses going bankrupt in Wenzhou totaled 198 and the situation could be even worse this year.”

“Sources also indicated that over 90% of guarantee companies in Wenzhou have gone out of business. ‘The credit system is on the brink of collapse and we are afraid it will be difficult to make a breakthrough in financial reforms this year,’ a business source in Wenzhou told the paper.’”

From Forbes. “On Friday last week the owners of Hong Kong-listed Greentown China Holdings, announced that they would be selling up to 30 percent of their stake in the Hangzhou-based company to sometimes-partner Sunac Holdings. The sale would mean a relinquishment of control in the oft-troubled developer, which has been struggling during China’s current real estate slowdown.”

“The company’s soon-to-be former chairman Song Weiping played the part of wounded warrior in the message posted on the company’s website, comparing the sale of the controlling interest in Greentown to his future demise. The tycoon declared that, ‘Leaving the real estate industry makes it possible to preview death.’”

“‘This year will separate the men from the boys’ in China’s real estate market. That was the prediction from Ronnie Chan, the billionaire chairman of Hong Kong’s Hang Lung Properties, when I appeared with him at a real estate event in Shanghai last month. This seems to be the type of bear market moment that more experienced developers, such as the proudly non-PC Chan, relish.”

“‘In the past companies in China have not gone bankrupt. This is crazy. Bankruptcy is good,’ Chan stated. He added, ‘You need to use the toilet every day. You have to discharge something.’”

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Comment by Housing Analyst
Comment by Housing Analyst
Comment by ibbots
2014-05-27 07:55:33

Dallas-area home prices hit a record high in the latest Standard & Poor’s/Case-Shiller Home Price Index.”


Comment by Housing Analyst
2014-05-27 08:13:13

Interesting Idjits but case shiller excludes defaults, foreclosures and short sales.

You were saying?

Comment by Ben Jones
2014-05-27 08:20:48

‘Another sign of the healthy real estate market in Plano is that foreclosures have decreased dramatically over the past three years. George Roddy, a local real estate analyst, said it is impossible to tell why the number of foreclosures dropped 50.4 percent from 2012 to 2013, but he thinks lenders may be giving people a longer leash.’

“In my estimation, they are keeping properties off the market for one reason or another,’ said Roddy, who began his real estate analysis business in 1970. ‘I don’t have the exact answer, but I think the federal government has told the lenders to slow it down. … They have just quit foreclosing, and there are many people who have lived in their house for a year or 18 months without paying a nickel.”

BTW, Roddy has been the most knowledgeable person on DFW foreclosures since before the S&L boom. Really interesting that lenders would sit on foreclosures in a market so “hot”. I find stuff like this all the time.

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Comment by ibbots
2014-05-27 11:02:06

Had an acquaintance who lived in Plano in a $500k house with a $800k mortgage for 2+ years who only paid property tax. BofA finally foreclosed early this year. BofA put it on the market but priced it too high and it hasn’t sold.

I tried to buy a short sale in late 2011 in Dallas. Chase was stuck on their price, seller eventually deeded it back to them. It has been vacant since early 2012.

“In my estimation, they are keeping properties off the market for one reason or another,’ said Roddy,”

Banks are familiar with the term ‘block discount’ and aren’t going to compete against themselves.

Comment by Doom
2014-05-27 08:19:08

Home prices up in 20 cities and increased again by 1.3%, people I go to new developments and they don’t really care if you can afford them or not anymore. Oh they offer you a free washer dryer or some blinds, but price reduction I don’t see it.

Everything is going up, and by mid 2015 watch interest rates start to move much higher. Make your best deal now folks in the resale markert, still grossly under water who want to sell, otherwise it is over for you.

Renting is your worse option in life, it is only a temporary condition, nobody ever gets rich renting anything ,only the landlord gets richer.

Comment by Housing Analyst
2014-05-27 08:23:39


I can ask $50k for my 12 year old Chevy pickup but where are the buyers at that price?

That’s why housing demand is in a free fall. Its the price.

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Comment by Whac-A-Bubble™
2014-05-27 05:37:39

“‘I think China’s property market is like the Titanic and it will soon hit an iceberg in front of it,’ Mr. Pan told a financial forum on Friday, according to the China Business News. ‘After hitting the iceberg, the risks will not only be in the real estate sector. The bigger risk will be in the financial sector,’ he added.”

The world loves bullish optimists!

Comment by Combotechie
2014-05-27 06:01:59

“The bigger risk will be in the financial sector,’ he added.”

As in poooooooof.

Comment by Combotechie
2014-05-27 06:04:43

“What experience and history teaches us is that people and governments have never learned anything from history, or acted on principles deduced from it.”
― Georg Wilhelm Friedrich Hegel

Comment by Ben Jones
2014-05-27 06:13:08

More from a translation site:

‘Soho China chief Pan Shiyi has again been caught making comments unawares. The summary comes from Investing in Chinese Stocks: His three reasons for weakness in the property market are registration system, real estate tax and land supply. On the first, the registration system will reveal who owns property, so obviously a lot of hidden money will turn into cash. Even better if it becomes foreign cash.’

‘On the second, in Beijing Pan knows people with 20, even 100 apartments, and not a one of them is rented. The real estate tax will push properties onto the market.’

‘On the third, rural areas will now be allowed to sell and develop land with the same rights as cities, and even in Beijing this could bring a huge amount of supply into the market.’

‘Pan also said the risk is not to the banks, but to the financial products (trusts, trust loans, third party WMPs). Developers are paying high interest rates and they are facing very tight credit markets. If home prices fall 20 to 30%, all the problems will be exposed.’

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Comment by Whac-A-Bubble™
2014-05-27 05:40:07

I keep raising the question here about whether the all-cash Chinese investor demand on the U.S. West Coast is destined to dry up with the collapse of their bubble at home.

The response so far?


Comment by Combotechie
2014-05-27 05:52:22

Your question is no interest to anyone. Go here to see what is REALLY captivating:

Comment by azdude
2014-05-27 05:52:30

I wonder if their govt will try and prop up housing prices by printing lots of cash and throwing it at holders of bogus loans?

Will all these chinese investors end up begging for a bailout by yellen?

Comment by Ben Jones
2014-05-27 06:16:50

‘Global management consultancy Bain & Company recently published a startling report indicating that the majority of China’s rising affluent classes are considering moving overseas. Reasons cited include a mistrust of the government, fear of several market bubbles bursting, intolerable levels of pollution and a desire to have an English-speaking education for their children.’

‘Ironically, the new wealthy classes have made their money from years of over-expansion in China. For most of the last decade, the country’s gross domestic product has grown by around 10% each year and it has been mainly business owners that would have taken the most advantage of that rapid expansion.’

‘Now that the period of expansion appears to be cooling, it would appear that many fear re-investing in China, preferring to spend their money overseas.’

‘The principal reason many of China’s wealthiest are investing outside of the country is because they are worried that the government could potentially relieve them of their hard-earned assets at some point as their increased wealth also increases their visibility.’

Comment by Ben Jones
2014-05-27 06:22:54

‘Liu Han seemed to thrive in the company of officials. But Liu’s close ties with officialdom didn’t last. When Chinese President Xi Jinping was named president at the end of the annual parliamentary session in March last year, the 48-year-old Liu was detained and surrounded by a different class of public servants; corruption investigators and prison guards.’

‘The billionaire head of the privately-held Sichuan Hanlong group of companies is the first high-profile casualty of a power struggle wrapped in a corruption crackdown that is convulsing the senior echelons of the ruling Communist Party.’

‘On Friday, a court in central Hubei province sentenced Liu to death after a sensational trial on charges of murder, gun-running, fraud, extortion, illegal gambling and a string of other offences. Liu had denied all the charges.’

‘Liu’s most serious offence, however, could well be political: He was caught up on the wrong side of a titanic power play, multiple sources said, because of his business partnership with the son of former domestic security chief, Zhou Yongkang.’

‘More than 300 of Zhou’s relatives, political allies, business associates, underlings and staff, have been arrested, detained or questioned, according to people briefed on the investigation. Liu was one of them. Authorities seized assets worth at least 90 billion yuan (RM46.5 billion) from Zhou’s family members and associates, two sources said. Liu’s assets were included in these seizures.’

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Comment by Blue Skye
2014-05-27 06:48:06

“Despite plunging prices and worries that growth in demand could be running out of steam, Chinese steel production has also remained at record levels, with output from large mills hitting a record high of 1.824 million tonnes per day in the first 10 days of May.”

The grafters may be getting nervous in China, but it is still pedal to the metal.

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Comment by Combotechie
2014-05-27 06:27:51

“I wonder if their govt will try and prop up housing prices by printing lots of cash and throwing it at holders of bogus loans?

“Will all these chinese investors end up begging for a bailout by yellen?”

Maybe what China needs is a Chinese version of American Homes for Rent (call it Chinese Homes For Rent), some sort of (choke) investment vehicle that would put to work some of those huge piles of money looking for a sure-thing investment idea.

Comment by oxide
2014-05-27 06:57:04

I think a Chinese version of HGTV would be more entertaining that Kim and Kanye.

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Comment by Blue Skye
2014-05-27 07:03:54

How would that fit into the Fed’s charter of throwing our money to the global bankers?

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Comment by Prime_Is_Contained
2014-05-27 07:37:26

Response: yes.

In a liquidity squeeze at home, those same investors may be in a panic to move assets out of the country, and there might be a very short-term uptick.

But with liquidity vanishing, many will no longer have the cash in hand to be “cash buyers” here.

The more important question, in my mind, is how will the Chinese central bank react?

If they pour fuel on the fire (likely, I would guess, as they have been trained by our central bankers), where will it flow? When the Fed was dumping liquidity (gasoline) on a fire, it flamed up, but also seriously distorted commodity markets and emerging markets.

Where will the Chinese liquidity flow to, and what will it distort?

Comment by In Colorado
2014-05-27 08:04:13

I keep raising the question here about whether the all-cash Chinese investor demand on the U.S. West Coast is destined to dry up with the collapse of their bubble at home.

Sounds like the “anti-corruption” campaign is incentivizing ChiComs to get their money out of the country. The cash surge will obviously end at some point.

Comment by Ben Jones
2014-05-27 06:28:31

‘A number of leading Chinese economists have noted international concerns over China’s financial leverage during recent economic seminars, reports Shanghai’s National Business Daily. Xu Nuojin, deputy director of the central bank’s statistics and analysis department, estimated the leverage ratio of China’s non-financial enterprises at 106% in 2012 and 109.6% in 2013, much higher than the corresponding levels of 49% in Germany, 72% in the US and 99% in Japan in 2013.’

‘According to a report released at the forum, central bank official Yao Yudong and two co-authors said that the leverage ratio of non-financial Chinese enterprises has topped 140%, placing enterprises on the brink of a debt crisis. The mounting debt servicing (repayment) cost has kept squeezing economic re-development funds, thus undermining the potential economic growth rate and expanding the risk of default.’

‘Figures compiled by the Ministry of Finance showed that aggregate revenues of state-run enterprises surged sharply from 21 trillion yuan (US$3.4 trillion) in 2008 to 46.5 trillion yuan (US$7.4 trillion) last year. But their profits grew by only 5.9% in 2013, while their annual financial spending growth rate jumped 33.5% in 2012, a far cry from 3.2% in 2008, before the growth rate dropped to 8.5% in 2013 and surging again to 19.3% in the first quarter of 2014.’

“This indicates that the growth of financial spending by state-run enterprises has outpaced their profit growth rate, a phenomenon that should not be ignored,” Yao said.’

Comment by Ben Jones
2014-05-27 06:31:36

‘Cheung Kong Holdings, the Hong Kong developer controlled by Asia’s richest man, Mr Li Ka-shing, is offering discounts of up to 16 per cent at its latest residential project in the city as developers accelerate sales this year.’

‘Prices, which Barclays forecasts will drop at least 30 per cent by 2016, are also under pressure from increasing supply in coming years.’

‘Cheung Kong Holdings has priced its first batch of 350 units at its City Point project in the New Territories area of Tsuen Wan at HK$9,062 (S$1,465) to HK$14,328 per square foot, compared with recent transaction prices of HK$9,600 to HK$13,000 per square foot in nearby areas, the South China Morning Post reported.’

‘Cheung Kong executive director Justin Chiu Kwok-hung said the prices had been designed to help buyers who are looking to upgrade to bigger units.’

“We are offering the first batch of units at lower prices in view of the government’s proposed easing of stamp duty rules to help upgraders. We also want our buyers to be happy with the price,” he said.’

Comment by Blue Skye
2014-05-27 07:11:39

Asia’s richest man, Mr Li Ka-ching…

He just wants to make life easy.

Comment by Ben Jones
2014-05-27 06:34:33

‘New home sales in Shanghai remained below the 200,000-square-meter threshold for the seventh consecutive week as extremely sluggish momentum continued to dominate the market.’

“Registered sales only reached 464,300 square meters in the first 25 days of this month for a daily average of 18,600 square meters,” said Huang Zhijian, chief analyst at Uwin. “That’s really slack for May. For the whole month transactions should be around 600,000 square meters, compared to 761,300 square meters in April.”

‘While there seemed no clear sign of an immediate pickup in momentum among home seekers, some real estate developers may have already stopped sitting on the sidelines.’

‘New home supply jumped 22.7 percent week-on-week to 290,500 square meters during the seven-day period ending on Sunday, remaining above the weekly average of 225,400 square meters registered over the past 12 months, according to Uwin data.’

“This provides evidence that some developers have stopped their `wait-and-see’ approach,” Huang said. “However, their pricing strategies will still be important in determining whether sales bounce back since buying momentum is still low.”

Comment by Housing Analyst
2014-05-27 06:40:00

“York Realtor Indicted Again On Drug Trafficking Charges”

Comment by Ben Jones
2014-05-27 06:49:41

‘A surveillance camera catches the moment an unsuspecting girl falls through a pavement while walking down a street in northern China. The pavement caved in under the teenager’s weight as soon as she stepped onto a section of the walkway.’

Comment by Crater
2014-05-27 06:57:13


Comment by Housing Analyst
2014-05-27 07:17:53


Comment by Housing Analyst
2014-05-27 08:05:15

She went for a stroll down Crater Lane. A horrifying trip millions of home-debtors are slated for over the coming months and years.

Comment by Carl Morris
2014-05-27 20:28:10

Wow…can’t believe how everyone else just walked right up to the edge of the hole. I’d have assumed that the parts around it were going to collapse, too.

Comment by Ben Jones
2014-05-27 06:59:06

‘Malaysia’s debt fuelled economy powered on steroids was the result of Bank Negara’s policy of low interest rates and the abundant availability of credit. To avert the economy from free falling credit expansion measures are taken to stabilize the economy. Economic growth as measured by the GDP is now a function of Government and private consumer spending financed by the credit expansion or put it simply ‘debts’.’

‘In the short run this might help mitigate the pain associated with a slowing economy such as a recession. Preventing a recession also means preventing the economy from performing its natural task on rebalancing such as getting rid of excesses accumulated along the way.’

‘One of the side effects of excesses is the inflating of assets prices to bubble levels. As a result we have various bubbles blown in the stock market, real estate, bonds and futures market in Malaysia.’

‘Bubbles are created by misallocation of resources because credit is not directed to the most efficient part of the economy. Take for example to prevent a downturn in our housing market, interest rates are kept low and credits are made easily available. With low down payments our local speculators are able to purchases a few houses in one go due to the low monthly mortgage payments.’

‘It is like buying a lottery ticket where the returns are very high with a small investment. This can happen in the housing market if speculators can find greater fools to buy it from them every few months. With leverage of up to 300% in margin accounts, it will be difficult to prevent people from buying lottery tickets in the stock markets as well.’

‘Betting on such high leverage can only go on as long as the markets keep going up. There will be bloodbath when the markets implode sooner or later.’

‘More than 70% of the debts are incurred by properties and followed by vehicles purchase. This unscrupulous spending has led to many of them unable to repay their debts and thus went into bankruptcy.’

‘Malaysia’s credit intensity of Growth has increased to more than 2x in 2013. Credit intensity to growth measures the amount of borrowing or debt to achieve a unit of growth. Studies have shown that in normal circumstances in an efficiently managed economy a $1 debt will generate an increase of $1.60 in GDP growth. This is because due to the effects of fractional reserve banking and the multiplier effect generated from bank loans, the resultant GDP growth should be higher than money supply.’

‘However as shown by the chart below, the credit intensity of growth in Malaysia soared from 0.7x during 2003-2007 to about 2.3x in 2013. This means that efficiency of capital utilization in Malaysia has been decreasing. To make it simple, during 2003-2007, we needed about RM0.70 to produce RM1 of GDP but in 2013 it went up to RM2.30. Thus our Government need to borrow more money to maintain the existing level of GDP growth.’

‘Due to misallocation of resources much precious capital are wasted because they are redirected to inefficient sectors of the economy. Thus there is not much economic benefit or productivity generated from those investments.’

‘Due to the diminishing return on debts, more money will be needed to achieve the same amount of growth. To further accelerate growth obviously more debts will be incurred due to the mal-investment arises as a result. So, what is the point of diverting more money into a bottomless pit? The following chart shows this phenomena that is affecting not only Malaysia but most of Asia.’

‘Governments can now generate capital by a new technology called the ‘Printing Press’ where they can churn out as much money as they can. The ability to print money has led to an enormous abuse of power by our politicians as they can buy influence and power through corruption. It is just a matter of time when our economy will be CRASH landing.’

Comment by In Colorado
2014-05-27 08:15:30

Malaysia’s debt fuelled economy powered on steroids

So much for robust Asian Tigers.

Comment by taxpayers
2014-05-27 08:27:26

in May/Sing you have to work to live
see 1998 Asian crisis
I’ll bet on them vs the west

Comment by In Colorado
2014-05-27 11:19:22

in May/Sing you have to work to live

The same is true in Latin Am and Africa. I’m not betting on them.

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Comment by Ben Jones
2014-05-27 07:05:16

‘With Japan’s population steadily decreasing, the country is finding itself with a bigger and bigger surplus of vacant houses—7.75 million of them, according to a 2008 survey. That makes more than 10% of all housing units in Japan unoccupied and that is set to increase to 30% by 2030.’

‘But Japanese Prime Minister Shinzo Abe’s economic reforms, lovingly dubbed “Abenomics,” hopes to turn this vacancy problem into a cash cow for property owners by changing hotel laws and loosening restrictions on renting out your home to tourists planning their ultimate Japanese vacation. And to jumpstart the initiative, a Japanese real estate giant has teamed up with a home rental website to match up homeowners to prospective overseas tourists who want to experience a more authentic Japan.’

‘Japanese real estate giant Able Inc., which manages about 120,000 properties, announced last week that it will begin working with the vacation home rental website Tomareru to start this new vacation home rental service. The new site will launch this fall and unlike the American website Airbnb, where people can rent out extra rooms for just one night, this new venture will focus on foreign tourists wanting to rent out whole houses for about a week at a time.’

‘What better way to “feel local” than living in a stranger’s home for a week?’

Comment by In Colorado
2014-05-27 08:12:56

‘What better way to “feel local” than living in a stranger’s home for a week?’

I knew a guy who did one of those ‘house swaps’ for a vacation we he went to the UK. According to him they got the short end of the stick, as the house in the UK was a dump and didn’t look anywhere as nice or spacious as it did in the photos.

Plus the idea of having strangers living in your house while you are away is utterly unappealing to me.

Comment by snake charmer
2014-05-27 08:58:41

This is the proposed solution to the impact on asset prices of a demographic collapse? What a complete and total intellectual vacuity. No wonder so many Japanese young people don’t give a damn anymore.

Comment by In Colorado
2014-05-27 09:31:00

Well, young Japanese men aren’t interested in being a married salaryman and working themselves to death anymore, they’d rather work a menial job and be “grass eaters”. Plus, like pretty much everywhere else, the country has more college grads than it needs, so unless they went to an elite school like Tokyo U, all their college degrees will get them are jobs in retail.

Converting surplus houses into B&B’s won’t help them. It probably won’t help anyone.

Comment by Ben Jones
2014-05-27 07:09:15

‘To see how impactful the government’s cooling measures have been, look no further than District 9. Data from the Singapore Real Estate Exchange for last month showed that the median Transactions-Over-X Value for District 9, which consists of Orchard, Cairnhill and River Valley, was negative S$130,000.’

‘In District 9, more than half of the buyers paid below market value. In fact, 50 per cent paid at least S$130,000 below market value.’

‘The TOX tells us that the sentiment in District 9 is very bearish, while that in District 10 is bullish. Why is there such a huge disparity between the two high-end neighbours? The data suggests that District 10 is where Singaporeans buy homes to live in, whereas District 9 is where buyers — both local and foreigners — purchase homes for investment.’

‘What this data suggests, at least in Districts 9 and 10, is that the cooling measures have been effective at cutting the investment market off at the knees, while allowing the owner-occupiers’ market to continue to grow, albeit at a slower pace.’

‘At the risk of mixing my metaphors, the cooling measures have frozen the hot money.’

Comment by Ben Jones
2014-05-27 07:12:03

‘Taiwan’s parliament, the Legislative Yuan, has passed amendments to the House Tax Act to schedule a rise in the tax on residential properties unoccupied by their owners to reduce speculation in the housing market.’

‘The ratio between residential home prices and incomes in the Taipei area has risen to about 15:1. The Ministry of Finance is seeking to reduce this ratio to 10:1 in the next two years to improve affordability for residents.’

‘The prime target of the luxury tax has been properties purchased for speculative purposes, rather than as family homes, which are often sold within a short period, pushing up prices. Under the luxury tax, the owner of a property suffers a 15 percent tax on a property’s sale if it is sold within one year of its purchase, falling to 10 percent if sold during the second year.’

‘However, the luxury tax’s current structure is seen to have not caught those wealthier investors hoarding several properties, who lawmakers have noted can afford to wait for longer than two years before realizing their gains. The housing tax increase has been adopted to supplement the luxury tax.’

Comment by In Colorado
2014-05-27 11:17:56

If they can’t rent them out, how are they going to sell them?

Amazing how in small places like Taiwan or even in tinier city states like Singapore they can still overbuild.

Yeah, a 30th floor apartment in an empty building in a part of the world known for earthquakes, that’s just what I want.

Comment by Ben Jones
2014-05-27 07:15:36

‘A slowdown in China’s property sector coming at a time when Australia’s government is clamping down on spending threatens to shave more than 1 percentage point off domestic growth. Australia relies heavily on its iron ore exports to China and the disproportionate size of the Asian powerhouse’s property sector, relative to other parts of its economy, means any impact will be felt locally.’

“The impact that a slowdown in the Chinese property sector would have on the Australian economy is quite large and meaningful,” Credit Suisse analyst Damien Boey said.’

“If you had a serious slowdown in Chinese property, which we are sort of seeing at the moment, you could easily shave off a per cent or so from the real GDP numbers [for Australia], unless of course you had offsetting policy stimulus, which we’re not really seeing at the moment,” Mr Boey said.’

‘Mr Boey said he believes there is a more than 50 per cent chance of a serious slowdown in China’s property sector. The trickle-down effects of a downturn in China’s property sector threaten more than just Australia’s miners.’

“It will affect our resources export volumes, it will affect out commodity prices and to the extent that it affects both of those and corporate profits, then it could actually affect jobs and even housing,” Mr Boey said.’

Even housing!

Comment by snake charmer
2014-05-27 09:11:48

I repeatedly have predicted the worst depression in Australia’s history once this ends. How the country’s leaders were unable to see the consequences of over-reliance on an unstable and corrupt trading partner will be a perplexing question for future generations, presuming they are permitted to discuss it.

China feels like nitroglycerin right now. And the Western democracies have become farce, almost comically incompetent to do anything other than spy on us and temporarily keep asset bubbles going at the behest of powerful interests.

Comment by Blue Skye
2014-05-27 10:10:00

Investment in mining expansion in Australia has been heavy. All that surplus capacity has not come on line yet. A slowdown in China will be crushing.

You have to catch the wave before it hits the beach!

Comment by Ben Jones
2014-05-27 15:28:23

‘Property prices in Australia’s major cities are booming, driven by record low interest rates and strong demand from overseas buyers. The average house price in Sydney and Melbourne has risen by more than a third over the last year.’

‘According to the latest survey from RP Data and Rismark, Sydney’s median house price has ballooned to $824,000, which is a record high. Melbourne’s median house price sits a little lower at $697,000 while Brisbane’s has risen to $509,000.’

‘The record high prices have triggered concerns the market may be headed for a bubble. Australian workers’ incomes aren’t keeping up with the rise, which is leaving the market open for a rising number of wealthy overseas investors.’

‘According to a recent Credit Suisse report, Chinese buyers are currently pouring more than five billion dollars a year into Australia’s residential market. The bank says close to a fifth of new properties in Sydney were sold to Chinese investors this year.’

‘Chief executive of McGrath Estate Agents, John McGrath says the current level of interest from Chinese buyers is quiet remarkable. “The Chinese buyers have been around for some time in Australia but the surge in activity in the last twelve months is somewhat unprecedented,” he said. “I haven’t seen such interest from an offshore market in thirty years. My thirty years in real estate anyway.”

Comment by taxpayers
2014-05-27 08:23:42

-2.4% in 3 months is a move
?what was the name of the abandoned city in mongolia?

skateboard haven

Comment by Ben Jones
2014-05-27 20:21:06

China’s Incredible Ghost Cities Will Make Your Jaw Drop

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