no offence, but if you don't recognize that chart on site, you really shouldn't be trading. there is a base basic general knowledge that one should endeavor to attain. it is the nikkei 225. to put the serial bad news poster, s2...., into place though: he is illustrating (knowingly or not) that a bubble can go on for a long time and this China illusion can go on much longer than he can stay solvent. speaking of which, did the other guy go belly up? overlay the tech bubble on top of this one and it tells the same story. everyone knew that was a bubble too, but lots of shorts died with their boots on b4 it popped. in fact, most of teh vocal bears never gained from all their 'correct' bearishness, as they ran out of capital b4 the bull ran out of mo-mo. real estate may be location x 3; calling bottoms and tops is all about timing/luck- being right is irrelevant without these 2 primary components.
Nah, just ignore this news as if it never even happened, just like in 2006 when I first started posting articles on the housing bubble many people ignored the fact there was one in the making, fast forward 4 years later and what do we have....ohhhhh just another asset bubble, just ignore it, it should go away like all the rest of them..... China: In 2009, property sales reach 4.4 trillion yuan Property prices are rising non-stop, especially in the big cities, favoured by easy bank loans. The government is concerned about speculation, which excludes many people, because it could cause huge losses in the financial markets. Tuesday, January 19, 2010 By Asia News See all articles by this author Article Tools Shanghai â In 2009, property sales jumped 75.5 per cent per cent over the previous year despite ever rising prices, the National Bureau of Statistics (NBS) reported. The possibility of quick profits and the ease with which bank are granting loans explain the flow of capital into the sector. This however is fuelling a speculation bubble that government action seems unable to bring under control. Full-year sales increased to 4.399 trillion yuan (US$ 644 billion), with residential sales jumping 80 per cent, the NBS said today. Home prices rose 7.8 per cent in December from the same period a year earlier, the fastest growth in 18 months. Average prices in 70 large and medium-sized cities across the country rose 1.5 per cent between November and December. Increases were much higher in the largest cities. Zhejiang topped the increase in sales value with a 130 per cent gain. In Shanghai, the gain was 126 percent. Mainland banks in Shanghai's red-hot housing market lent 99.58 billion yuan in new mortgages last year, the People's Bank of China said yesterday. In November, the average price of new homes in urban Shanghai was 31,209 yuan per square metre, up 68 per cent from 2008. Many economists are concerned because many sales are speculative and prevent the bulk of the population from buying a home because they cannot afford such high prices. Many migrants, who are the engine of Chinaâs growth because of their low wages, cannot pay and have to go back to their villages. In order to rein in speculation, the government has announced and partly implemented a number of measures, including a sales tax on second homes and on homes sold within five years of their purchase. However, this has not discouraged investors, favoured by easy accessible, low interest bank loans. At the same time, the government does not want to kill the property market because it represents 8 to 10 per cent of GDP. For some analysts, the governmentâs intervention might be too little too late if it is not decisive. About 20 per cent of all loans extended by Chinese banks now go to the real estate sector, including individual mortgages and loans to developers, according to Wang Zhaoxing, vice-chairman of the China Banking Regulatory Commission. Hence, if prices should collapse, its effects would be disastrous, and not only for property owners but for the whole of the financial system. Some are concerned that the property market might burst as it did in the United States, where banks gave too many loans that buyers could not pay back forcing the banks to choose between losing money and evicting millions of people.
Average income in HK is about $43k USD per year. A 1bd apt runs about $230k USD. A 2bd apt runs about $300k USD. A property should not cost 5 to 6 times your income. Sure if you put 40%, then there is not much to worry about and the bubble probably will not pop like it did here. But the housing market will dry up along with the equity of the people that bought homes at high prices. It will be different in the sense that instead of the banks holding the bag, the people will be holding their own bags.
dont misread my posts. I have never been bullish these days. I said the average Shanghai housing market is not in a bubble but merely overpriced. What is in a bubble (and I claimed can go up a lot more before it implodes) are the top priced residential objects.
Price action my friend, price action. By December of 2007 it was absolutely clear that the market rejected to go higher from the October top. Whatever good news came out of China did not spark additional risk taking. What is the part which is not crystal clear to you? In the same fashion Goldman along some others read the housing market correctly at the right time. You could have sampled housing prices in many different metropolitan areas in the US, the number of new house construction and turn around of existing objects. Which part is again not crystal clear. Looking at construction and home builders would have given you a delayed albeit still perfectly correct short signal into the market.
1) the height of the shanghai real estate market was around beginning of dec, there was a major buying frenzy. 2) since then, the tone of the government policy have cooled the buying frenzy, price dropped about 5% across the board, and sales have slowed. But it wasnt anything dramatic or panicky. 3) china real estate will NEVER be like the us bubble at least in the foreseeable future, the reason is very simply, most of the real estate are bought with 100% cash, and those who use mortgage are at least 20% down and most times much more. There is no subprime, zero down, and any other crap that brought down the us market. If the prices drop dramatically most people can afford to hold it indefinitely. But more important, is the MINDSET of the chinese people, they are nesters/savers whatever you call it. Those who buy a property usually have ample reserve left in the bank and are all savvy enough to know they can afford the payment for many years to come, and plan to leave the property to their children debt-free when they get married. 4) now the shanghai real estate market is a different story. You have to understand a few key fundamentals. - there are 1.3 billion people in china - shanghai is considered the crown jewel of china, anybody who is somebody wants to own a property in shanghai. And there are a LOT of rich farmers/factory owners etc..all over china. -shanghai is the financial center of china, and soon asia and eventually a world financial hub. china's economic power is undeniable at this point, anyone who choose not to profit from it is a fool. - there is absolutely no space left to build in shanghai, the last piece of land in pudong is now leveled and redeveloped for the world trade expo 2010. Shanghai disney(will be largest in the world) is scheduled to begin construction end of this year or so, on the outskirts of shanghai, sealing up the city real estate completely. Do i think shanghai is a bubble? NO. Do i believe the real estate price of shanghai may eventually drop 10-20% before going up again? MAYBE, as market cycle is undeniable As such I have sold both of my condos that are priced above 1m rmb(~150k usd) during the dec frenzy, but still holding all the sub 1m rmb units, because they are of little risk, considering the location even if there is a major drop, people still need a place to live, you will reach a price threshold much faster for cheaper properties. And just fyi to the article, any property above 300k usd is considered expensive/luxury, also there is no property tax/condo fees to pay (very little ~$10 a month). At the end of the day, all the haters have been saying china is going to crash for the last 5 years (a property i bought at 50k usd 5 years ago is now worth 200k usd), while missing MAJOR profit. The point is china right NOW is the safest place to place your money (where else you going to put it? in the US? UK? under your bed?). Yes there is always risk, but all things considered (currency, economy, government - one of the most economic savvy dont care about political agendas), china has better risk/reward than any other country. Article pasting fools like S2007S has no grasp of the reality over there, i really do understand their mindset - a strong feeling of jealousy over china's rise, and paralyzing fear about US' downward slope in comparison. Instead of doing something to take advantage of the situation, all they can do is secretly..desperately..praying something bad happens to china to make it fall, finding every little article negative about it to make themselves feel better.