The Impending Collapse of China
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shanghai condo prices went up again, luxury 2br (~1100sqf) is 4+ mil yuan(~600k usd) and that's not even in the good locations in shanghai. Price just refuse to come down even with all the policies and rate hikes, everyone wants a home in the big cities, and they all have cash now.
http://shanghai.anjuke.com/v2/commu...Z4QQorderstrZ31QQorderstrZ81QQp17Z8769QQs3Zup
Impending collapse unlikely, only way this will collapse is if everyone loses their job, only way that will happen is if the chinese economy crashes, given the double digital gdp growth and massive reserve the govt has, all the fools crying doom will be waiting for a while.
http://shanghai.anjuke.com/v2/commu...Z4QQorderstrZ31QQorderstrZ81QQp17Z8769QQs3Zup
Impending collapse unlikely, only way this will collapse is if everyone loses their job, only way that will happen is if the chinese economy crashes, given the double digital gdp growth and massive reserve the govt has, all the fools crying doom will be waiting for a while.
China Real Estate: Wen Jiabao said the government will continue to curb home prices
Posted at 22:37 on 26 Dec, 2010 by Zarathustra
http://www.alsosprachanalyst.com/re...d-they-will-continue-to-curb-home-prices.html
"Wen Jiabao is reported to have gone to a radio programme this morning and took questions from the internet. One of them asked Wenâs comment on the effectiveness of previous efforts in curbing home prices. Premier Wen said the government has taken various steps, but the implementations of them did not seem effective enough so far. He added that the primary goal next year will be to build 10 million public housing for low-income people. The government will continue to curb speculative activities by implementing stricter credit standard, and to manage land use to stop people from speculating on land prices increases. "
Posted at 22:37 on 26 Dec, 2010 by Zarathustra
http://www.alsosprachanalyst.com/re...d-they-will-continue-to-curb-home-prices.html
"Wen Jiabao is reported to have gone to a radio programme this morning and took questions from the internet. One of them asked Wenâs comment on the effectiveness of previous efforts in curbing home prices. Premier Wen said the government has taken various steps, but the implementations of them did not seem effective enough so far. He added that the primary goal next year will be to build 10 million public housing for low-income people. The government will continue to curb speculative activities by implementing stricter credit standard, and to manage land use to stop people from speculating on land prices increases. "
Quote from Petsamo:
The Governor got caught setting criminals off too early to save money. Now he wants to send more people to jail?
People would rather not go to jail in Russia or China. Here, we have the finest accomodations the world has to offer. Ask the Guantanamo detainees.
Better yet, ask WikiLeaks suspected leaker Bradley Manning.
http://newsone.com/world/newsonestaff2/bradley-manning-wikileaks-detention-prison/
Ireland had double digit GDP growth for a number of years. Now look where they are. Just because China is growing fast now doesn't mean it will continue. All countries go through cycles and if China is producing these impressive GDP growth numbers by building vacant homes then there is trouble on the horizon.
Shanghai market is very different from western realestate market. Most of you don't know about Chinese culture, so you are only looking at the fundamentals.
Yes - housing prices compare to average salary is way out of line. 1.5million yuan for crappy 2bed (800sq feet). Average salary in Shanghai is around 2500 yuan a month.
Before 08, people in the US bought homes way over what they can afford with NINA loans (no income, no asset). But in China, you can't get that type of loans. You will need to have that 20% in cash - the way people save there, they have it. Most of them can put down more than 30% of the home value in cash because they buy the home with a family of 4 incomes - your parents, you, your wife. Sometimes, your in-laws incomes help you as well due to the 4-2-1 affect (4 grandparents, 2 kids each side, 1 grandchild)
But of course, the well connected don't need to put that much cash down in a home. They may not have that much "clean" cash in the bank. We all know that the well connected in China have plenty of hidden cash around - businesses, kick-backs, etc.
In either two cases, the buyers can obsorb a price correction - unlike what happend here.
Yes - housing prices compare to average salary is way out of line. 1.5million yuan for crappy 2bed (800sq feet). Average salary in Shanghai is around 2500 yuan a month.
Before 08, people in the US bought homes way over what they can afford with NINA loans (no income, no asset). But in China, you can't get that type of loans. You will need to have that 20% in cash - the way people save there, they have it. Most of them can put down more than 30% of the home value in cash because they buy the home with a family of 4 incomes - your parents, you, your wife. Sometimes, your in-laws incomes help you as well due to the 4-2-1 affect (4 grandparents, 2 kids each side, 1 grandchild)
But of course, the well connected don't need to put that much cash down in a home. They may not have that much "clean" cash in the bank. We all know that the well connected in China have plenty of hidden cash around - businesses, kick-backs, etc.
In either two cases, the buyers can obsorb a price correction - unlike what happend here.
yes the china/shanghai real estate market is not leveraged like US/europe, no matter how much the price seem to be out of wack. There are no retarded zero down buyers(the stupid cant afford to buy, the rich are not stupid), most are savvy and knows exactly what they are getting into - within their limit.
Many are bought with cash straight up, all loans require 30% down, no loans allowed for 2nd home/investment property. Carry cost(property tax/condo fees) are so low they may as well not exist. 1mil usd apt cost $100 a month (tax+condo fees). Mortgage default is very rare. I am not sure what more the government can do, there is no house of cards.
If price fall it will be because people choose to sell based on their market view, not because they are forced to sell/foreclosed due to default.
Chinese are just full of cash right now vs americans who are mostly in debt/leveraged. 1.3 billion people, conservatively 5% of them are rich, only 1 shanghai in china, do the math.
Government is going to extremes to stop the house prices, usually you never bet against the govt, but so far they are not even putting a dent on the price trend. 2011-12 will show who's winning - govt vs buyers.
Yes china is all vacant cities in the desert, and they are also just like ireland. Now go watch some nascar.