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Chinese house price slide accelerates
Topic Started: 4 Aug 2014, 11:02 AM (1,631 Views)
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http://investinginchinesestocks.blogspot.com.au/

Here is what I’ve said many times about buying restrictions:

…easing buying restrictions is a bad policy because it won’t work. It allows speculators and investors to buy up homes, but the trend now is for investors and speculators to sell homes. It may help the big investors who need to offload 100 homes to another big investor, but speculation has died down considerably. In cities that have eased policy, they have made it easier for home buyers to obtain residency. Those cities have made home buying more attractive.

I’m not ready to declare total victory yet because September and October are the big sales periods, but after the few rushes in sales I reported last week, the results in wider cities is showing sales still falling. From Ifeng, Hangzhou, Jinan and Nanning have seen some quick results following the cancellation of buying restrictions, but most cities have seen no impact.

Jinan has seen area sold triple two weeks after easing restrictions, while Nanning average weekly sales are up 27% since it unofficially eased 11 weeks ago. However, sales are down from the 170,000 sqm sales peak in the first week to about 100,000 sqm per week now. Hangzhou and Wenzhou saw huge weekly sales spikes recently (see here and here), but that growth may also fade quickly.

A second Ifeng article reports that Changchun and Wuhuan have seen small sales bumps of 5% following the easing of buying restrictions. Tianjin and Xiamen have seen no increase in sales. Nanchang and Wuxi have seen sales continue to fall.

Chinese buyers now have a “wait-and-see” attitude. The the big sales period is September and October and buyers may wait until then, when price discounts are expected to be bountiful and many new developments will enter the market. Discounts will be guaranteed if sales don’t pick up in August as well because it will be developers last shot at big sales in 2014.

Moreover, the fitful response to easing has so far done nothing to reduce price falls. In fact, in July they accelerated. Initial data from private sources is good for reading trends before we get the government data mid-month. Here’s a list of home prices in 100 cities from the China Index Academy showing price declines steepening. Prices fell an average of 0.8% in July, up from a 0.5% average decline in June. The June number was slightly better than government numbers. The report is here.

The first list below is 100 cities with month on month price changes, followed by average and median price per sqm. Below that are the 10 largest cities broken out along with existing home price changes. All of them saw new home prices decline in July; only Chongqing saw an increase in existing home prices.

Quanzhuo in Fujian province led the 100 cities with a 1.66% increase in new home prices, followed by Qinhuangdao (a city with excess inventory) and Shijiazhuang, the latter two both in Hebei province. In total, 24 out of 100 cities saw price increases.

At the other end, Jilin in Jilin province and Heze in Shandong province led the losers with losses of more than 3% mom.

Several of the cities in Zhejiang province, home to several housing bubbles, had some of the smallest losses. Hangzhou was down 1.5%, but Ningbo and Wenzhuo both saw price increases. Maybe this is a bump due to this area being the home province of many housing speculators and buying restrictions being eased. The market in Wenzhou has also been falling for nearly 3 years. One month isn’t a trend, but the gain, if it shows up in the official numbers later this month, will break a 30+ month chain of losses.
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newjez
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http://www.telegraph.co.uk/finance/economics/11013287/Global-economy-one-shock-away-from-another-crisis.html

Oh dear
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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newjez
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http://m.theepochtimes.com/n3/855819-debt-binge-smashes-small-corporates-in-china/

http://manilastandardtoday.com/mobile/2014/08/07/asia-s-next-crisis-is-a-flood-of-debt/
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Perthite
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Thanks for those.

Here is another.

http://m.theepochtimes.com/n3/814548-chinas-subprime-moment-arrives/?sidebar=related-below

“Our industry survey suggests that a more than 30 percent price correction in the next 12 months is necessary to move inventory. That correction is likely to push low-margin developers off the cliff,” Li writes.

JP Morgan’s China chairman of investment banking Frank Gong estimates that 87.5 percent of the 80,000 real estate developers currently in business might be wiped out.

“Many developers will vanish during the price fall and industry reshuffle in the future,” he said at the 2014 Noah Private Wealth Management Forum in Qingdao City, July 19. He thinks a price decline of only 10–15 percent will be enough to achieve this industry consolidation.

Hope we don't need to sell ore during that period.
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Jimbo
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newjez
9 Aug 2014, 06:52 PM
Chinese apartment building is a ponzi scheme without a doubt. I was there and everywhere you look there are cranes. Most of the apartments a few years back were being snapped up by leveraged speculators off plan banking on 30% gains at completion and then selling them on.

It is the Celtic Tiger economy on steroids.

It wont end well.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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miw
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Jimbo
9 Aug 2014, 07:09 PM
Chinese apartment building is a ponzi scheme without a doubt. I was there and everywhere you look there are cranes. Most of the apartments a few years back were being snapped up by leveraged speculators off plan banking on 30% gains at completion and then selling them on.
You are making this up. It's years since banks have been allowed to lend money for dwellings beyond the first, and buying a place off the plan in order to flip it on completion has never been a winning proposition due to the "second-hand" market being so much weaker than the new dwelling market. It's like buying a car in order to flip it after you have driven it off the lot.

I'm pretty bearish about Chinese real estate, but strangely enough the shares of the big developers have been surging recently.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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newjez
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miw
10 Aug 2014, 05:38 PM
You are making this up. It's years since banks have been allowed to lend money for dwellings beyond the first, and buying a place off the plan in order to flip it on completion has never been a winning proposition due to the "second-hand" market being so much weaker than the new dwelling market. It's like buying a car in order to flip it after you have driven it off the lot.

I'm pretty bearish about Chinese real estate, but strangely enough the shares of the big developers have been surging recently.
Is buying off plan and selling on completion second hand?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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miw
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newjez
10 Aug 2014, 06:23 PM
Is buying off plan and selling on completion second hand?
Yes.

Two entirely separate markets. The second-hand market is suppressed. Until fairly recently you couldn't get a loan for an existing dwelling. Crazy, I know.
The truth will set you free. But first, it will piss you off.
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Jimbo
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miw
10 Aug 2014, 05:38 PM
You are making this up. It's years since banks have been allowed to lend money for dwellings beyond the first, and buying a place off the plan in order to flip it on completion has never been a winning proposition due to the "second-hand" market being so much weaker than the new dwelling market. It's like buying a car in order to flip it after you have driven it off the lot.

I'm pretty bearish about Chinese real estate, but strangely enough the shares of the big developers have been surging recently.
Wealthy Chinese people were buying off plan and then selling once the building was finished. Not selling second hand.

I have lived and worked in China so piss off.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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miw
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Jimbo
10 Aug 2014, 07:05 PM
Wealthy Chinese people were buying off plan and then selling once the building was finished. Not selling second hand.

I have lived and worked in China so piss off.
Well, it must have been a long time ago or you had no clue what was going on.

I am sure there was some of it going on, but did they make any money out of it? Not unless it was between 2003 and 2006. Did they borrow money to buy the dwellings? No they did not. It was people with suitcases full of banknotes, and it has been impossible to borrow money for a second dwelling since 2010. Was it ever a significant part of the market? Absolutely not.

As an example, the apartment I am living would sell for about RMB70-80,000/sqm if it was off the plan today. I could buy it today for RMB45,000. If it was just completed, maybe RMB60,000. (It's 10 years old.)
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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