Property market in China ... Boom OR Bust OR Denial ??

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Submitted by HLS on April 18, 2012 - 3:47pm

At its peak, residents were "crazy about buying property", said Ma Tengfei, 28, Huazhong Realestate's sales manager.

"We gave our customers only half an hour to decide whether to buy or not because we had other customers interested. People were in such a frenzy, they didn't worry about the quality. They were just worried whether they could get one," he said.

Later that year, the market cooled locally and nationally, thanks to measures such as restrictions on second-home purchases and increases in minimum down payments. Those without a Baoding residence permit were stopped from getting mortgages in the city.

While there has not been a crash, government data indicates new home prices fell in 45 of China's 70 major cities last month, and increased in just four.

http://www.thenational.ae/thenationalcon...

Submitted by The-Shoveler on April 18, 2012 - 4:22pm.

All of the above.

First it is not easy to get your money out of china for most citizens, so this is seen as the only investment they can trust and control (you really think you can trust Wall Street, china's version is much much more corrupt).

Second they have 2 or so billion people over there most of which live in the poor countryside and must move to the cities to survive.

Third they must find about 25 million new jobs every year to keep the masses form revolt (there are riots in china everyday no one in the outside world ever hears about, if we could find 3 million new jobs it would be 2005 all over again to put it into perspective).

Fourth and yet they cannot continue this pace forever.

Submitted by jimmyle on April 19, 2012 - 8:25am.

Eventhough home prices in China might go down significantly, you won't see people walking away from their homes like in the US simply because at least 30 percent of the purchase price is required for a down payment and 50 percent for the purchase of a second home.

Submitted by Jazzman on April 19, 2012 - 10:51am.

Firstly, can you trust the data? Secondly, they have a huge advantage is seeing the US bubble unfold, and thirdly state capitalism will have a firmer grip on things.

Submitted by sdduuuude on April 19, 2012 - 4:40pm.

De Nile has apparently moved from Egypt to China.

Followed by bust.

Submitted by The-Shoveler on April 19, 2012 - 6:39pm.

Housing is about the same percentage of china's GDP as the U.S.A. was during the bubble (maybe a little less actually) but they rely on it to employ a large part of migrating workers into the Cities.

Don't know how much of China's GDP relies on ipads
Seems if the ipad busts, the U.S. economy will go down about 15% (well looking at the Nasdaq anyway) Well at least SD economy.
(just kidding sort of)

So I wonder who is sitting on the bubble.

Submitted by carlsbadworker on April 19, 2012 - 9:11pm.

jimmyle wrote:
Eventhough home prices in China might go down significantly, you won't see people walking away from their homes like in the US simply because at least 30 percent of the purchase price is required for a down payment and 50 percent for the purchase of a second home.

Yes, they won't walk away but that doesn't prevent them from walking out to the street:
http://blogs.wsj.com/chinarealtime/2011/...

And since most developers and local governments use the bank's money to play the housing bubble there. Expect it to hit the real economy from the banking side as well through just a different way...

Submitted by carlsbadworker on April 19, 2012 - 9:28pm.

Jazzman wrote:
Firstly, can you trust the data? Secondly, they have a huge advantage is seeing the US bubble unfold, and thirdly state capitalism will have a firmer grip on things.

That's actually more dangerous. I refer to the belief that the state capitalism will have everything under control...just like the belief that Lehman will not bankrupt. The huge advantage that the Chinese have is their income is rising fast. So a different yardstick should be used to judge whether it is over-priced or not over there. Similar to price-to-income, price-to-rental is also not comparable because the landlord has very little holding costs (with zero property tax and very low maintenance fees due to cheap labors). So it is only reasonable to have higher multiples comparing to US...but the question is how much. My personal belief is that it has gone over the rational limit over the last two to three years but it was actually pretty reasonable before then.

Also seeing the US bubble unfold is not as big a advantage as you would think, people always discount things that do not happen around them. That's the greatest insight that Mark Zuckerberg had: “a squirrel dying in your front yard may be more relevant to your interests right now than people dying in Africa.” Otherwise, how do you get so much nonsense in social media? Do I have to know that you walked your dog?

Submitted by briansd1 on April 20, 2012 - 3:26pm.

The-Shoveler wrote:

Don't know how much of China's GDP relies on ipads
Seems if the ipad busts, the U.S. economy will go down about 15% (well looking at the Nasdaq anyway) Well at least SD economy.
(just kidding sort of)

Remember how the late 1990s boom economy was thanks to the Internet?

Lately, Apple has been leading the smart mobility revolution. Remember that Al Gore is on the board of Apple.

Al Gore himself has been making quite a bit of money on emerging technology. What better revenge than to become filthy rich?

Submitted by flu on April 20, 2012 - 3:48pm.

Folks, let's get something straight... Even if chinese real estate craters, it doesn't make one difference about something.

Those who are already filthy rich from China's economic boom will always remain filthy rich. The only people that get screwed are the poor people and the middle class...

Sound familiar?

And most of the new immigrants from overseas these days are not the ones coming over on student visas......So at this point it doesn't matter what happens over there or doesn't...

But no worries. All this wealth has red tape... For instance the most recent scandal...

http://en.wikipedia.org/wiki/Wang_Lijun_...

And don't think for a minute any of you foreigners are safe...

http://www.telegraph.co.uk/news/worldnew...

http://www.bbc.co.uk/news/world-asia-chi...

Brian, I have to say, for all the awe inspired reverence you express about how well you think China is run... I just have to laugh. You only see the side that their government wants to see... The red tape, corruption that goes on in this country is no where near the sort of things that goes on there.

Submitted by SD Realtor on April 20, 2012 - 3:50pm.

Lately, Apple has been leading the smart mobility revolution. Remember that Al Gore is on the board of Apple.

Al Gore himself has been making quite a bit of money on emerging technology. What better revenge than to become filthy rich?

****

I remember reading something about how much Gore stands to make off of the carbon credit stuff as well.

Damn I wish I could have thought of that scam... Except even if I did, I would have had to have been a well placed politician to pull it off... oh well...

Submitted by Allan from Fallbrook on April 20, 2012 - 4:13pm.

SD Realtor wrote:
Lately, Apple has been leading the smart mobility revolution. Remember that Al Gore is on the board of Apple.

Al Gore himself has been making quite a bit of money on emerging technology. What better revenge than to become filthy rich?

****

I remember reading something about how much Gore stands to make off of the carbon credit stuff as well.

Damn I wish I could have thought of that scam... Except even if I did, I would have had to have been a well placed politician to pull it off... oh well...

SDR: If you want to have some fun, check out Al Gore's net worth prior to "An Inconvenient Truth" and after.

Yeah, its a scam alright and ManBearPig has made himself obscenely rich from it. All the while living in a massive 20,000sf home and flying on private jets.

Submitted by Allan from Fallbrook on April 20, 2012 - 4:16pm.

flu wrote:

Brian, I have to say, for all the awe inspired reverence you express about how well you think China is run... I just have to laugh. You only see the side that their government wants to see... The red tape, corruption that goes on in this country is no where near the sort of things that goes on there.

FLU: Good article in FP on the endemic corruption within the People's Liberation Army (I love that name!): http://www.foreignpolicy.com/articles/20...

China has significant problems, especially when you consider their demography and ratio of men/women (1.2/1) and the effects of the "One Child" policy.

Its gonna get worse from here.

Submitted by The-Shoveler on April 20, 2012 - 5:36pm.

I find it interesting even the Chinese officials seem to be setting up their families in Australia, Canada and the U.S.A. (even Toronto, and Ottawa Canada) as fast as possible. But I think for the rest of us (the U.S.A.) the real danger is i-clones.
I think it is just a matter of time before you start seeing low cost i-clones everywhere; I am surprised we have not already really. What happens when you base a large part of your economy on small hand held devices made in places with extremely clever people with little to fear.
You maybe able to control things like access in the U.S. but I don’t think it will apply everywhere.

sent from my iphone LOL, (just kidding).

Remember Huawei.
Just saying,

Submitted by flu on April 20, 2012 - 7:16pm.

The-Shoveler wrote:
I find it interesting even the Chinese officials seem to be setting up their families in Australia, Canada and the U.S.A. (even Toronto, and Ottawa Canada) as fast as possible. But I think for the rest of us (the U.S.A.) the real danger is i-clones.
I think it is just a matter of time before you start seeing low cost i-clones everywhere; I am surprised we have not already really. What happens when you base a large part of your economy on small hand held devices made in places with extremely clever people with little to fear.
You maybe able to control things like access in the U.S. but I don’t think it will apply everywhere.

sent from my iphone LOL, (just kidding).

Remember Huawei.
Just saying,

You know same could be said for india and same could be said about soon to be vietnam... The problem isn't "china" or "india" or "insert your country here with cheaper labor"...Consumers no longer want quality. They want the cheapest possible thing. And hence why we're in this predicament... welcome to the new economy.

Submitted by briansd1 on April 21, 2012 - 10:40am.

flu, I'm in awe of China the same way I remain in awe of the American Robber Barons and how they built their companies and America.

Allan is right. China has a demographic problem and they will need to deal with it in the next couple decades.

In China, ethnic minorities and the less educated are having more kids... That will result in a wealth gap and social unrest until China takes affirmative action to deal with it.

Submitted by briansd1 on April 21, 2012 - 10:47am.

flu wrote:
onsumers no longer want quality. They want the cheapest possible thing. And hence why we're in this predicament... welcome to the new economy.

I actually think that the change is for the better.

Products are not scarce and expensive like they use to be. Even luxury items are commoditized. The difference is in the branding and the marketing.

Everybody now can have a closet full of clothes. That wasn't the case 60 years ago. Everyone now has home appliances and air-conditioning.

That reminds of the thread on living on $7,000 per year. It's possible to do it and still live well if you forgo all the "lifestyle" product and services.

Submitted by Allan from Fallbrook on April 22, 2012 - 12:37pm.

briansd1 wrote:

Allan is right. China has a demographic problem and they will need to deal with it in the next couple decades.

In China, ethnic minorities and the less educated are having more kids... That will result in a wealth gap and social unrest until China takes affirmative action to deal with it.

Article in The Economist on China's demographic issues: http://www.economist.com/node/21553056

Submitted by scaredyclassic on April 22, 2012 - 1:05pm.

i remember as a kid things having more value. just having some thing. i had a bunch of them, but they were more valued by me than things my kids have. things are less scarce now.

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