Home » Posts tagged 'chinese housing market'

Tag Archives: chinese housing market

Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

China Housing Market Is On Life Support

China Housing Market Is On Life Support

We must understand the housing market in China to fully comprehend how wealth is stored by many people in China. To those looking in from the outside, the housing market in China appears a house of cards ready to collapse at any minute. It is also a market sector that has become greatly oversized that it may now account for 25% or more of China’s GDP. Because it has become so ingrained in China’s economy we find that the Chinese government has no choice but to shore it up while at the same time trying not to encourage its growth.

Prices Have Soared In Top Tier Markets

China has over 680 cities but four are considered to “rule supreme” and are viewed as the best; Beijing, Shanghai, Shenzhen, and Guangzhou. As in many countries, the supply of housing falls well short of demand in the top cities, leaving many people increasingly stretched to buy there. The average price for a one-bedroom apartment in Shanghai is nudging towards $1 million. The  job magnet metropolis of Shenzhen is no bargain either, at about $700,000 for a flat.

A clear sign something is wrong is evident in the findings of an analyst for economic research firm Rhodium Group that estimates around 90 million apartments across China are sitting vacant. This indicates a huge oversupply in some areas of the country and unaffordable homes in certain cities. For years, developers have put up large apartment blocks in isolated parts of China. This was done because the land is less expensive in these areas and under the concept “if you build it they will come,” but often, they have not.

…click on the above link to read the rest of the article…

China is going to hit a wall

Anne Stevenson-Yang, co-founder and research director at J Capital, warns that the monster bubble in the Chinese housing market is ripe to pop and that the Chinese currency will crash.

It’s been exactly two years now since turmoil in China’s currency markets threw investors around the globe into panic. After the shock in late August of 2015, another tantrum followed in early 2016. Since then concerns about China have diminished. The consensus seems to be that Beijing once again has regained control. Nonetheless, Anne Stevenson-Yang remains skeptical. The co-founder of the influential research firm J Capital warns that the speculation in the Chinese real estate market is getting evermore excessive. “There is little comfort that the economy can go on for much longer without some catastrophic adjustment”, says the American who’s one of the most distinguished experts on China. She expects that China’s currency will devalue significantly and explains why the Chinese government is cracking down on HNA and other Chinese companies that have been on an overseas buying spree.

Ms. Stevenson-Yang, many investors don’t seem to care much about China anymore. How is the situation inside the Middle Kingdom two years after the currency shock of August 2015?

Everyone in China – from the government at every level to the people who work in banks, construction companies and real estate companies – is one hundred percent focused on how to push growth with more investment. That’s all people think about. Everybody is maniacally focused on the questions if investments will continue and if investments can continue to drive growth.

…click on the above link to read the rest of the article…

So China’s Authorities Crack Down on Housing Speculation?

So China’s Authorities Crack Down on Housing Speculation?

Who’s Behind China’s Wild House Price Bubble? State-Owned Property Developers, Funded by State-Owned Banks.

Beijing’s municipal government summoned representatives of state-owned property developers on Monday and told them to stop hyping the already overheated housing market, according to the portal, Chinese Real Estate Business (CREB), cited by Reuters.

State-owned property developers, funded by state-owned banks, have been a major force in inflating home prices as they bid aggressively for land to gain market share. According to CREB, state-owned developers bid for nearly half of the most expensive land in China during the first five months of 2016. And that trend has continued. But after the meeting with the municipal government of Beijing, these firms may be forced “to change their land strategy.”

Telling state-owned developers to stop hyping, as CREB put it, “operational and market activities” would be the latest effort to crack down on property speculation gone wild in China. It would come on top of the numerous other ways local and central authorities have tried to curb this speculation, without success so far.

Today, the National Bureau of Statistics reported that new home prices in 70 cities surged 11.3% in March year-over-year. It was the 18th month in a row of year-over-year gains. Prices jumped 19% in Beijing and 16.8% in Shanghai (chart by Trading Economics):

On a monthly basis, new home prices rose 0.6%, the fastest in four months, up from 0.3% in February. Of the 70 cities in the index, 62 experienced a month-to-month price gain, up from 56 cities in February, once again defying expectations of a slowdown. Prices jumped the most in Haikou (2.6%), Sanya (2.5%), and Guangzhou 2.3%), followed by other second- and third-tier cities, to which the speculative fire has been spreading.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress