This has little to do with the Chinese economy. It has to do with confidence in BJ real estate prices which have gone nuts the last 3 years. Some people are looking to take some money off the table and move it into other opportunities. One of the opportunities that seems to be opening up is trust company investments in government infrastructure projects. Local and provincial governments are being blocked from borrowing from banks and are turning to private finance.
MIW, Do you think that the Chinese are any more, or less likely to act in a herd mentally compared to other nationalities?
Of course its when people start taking money off the table that crashes begin.
Seas of for sale signs as spooked investors rush for the door.
Then people learn just how illiquid an asset housing really is.
The problem here is when investors mostly wish to unload and the buyer of last resort is merely the consumer.
The reason the gold is so liquid is constant marginal utility. That is the consumer of gold can never have too much, hence the market is constant. Now that utility is always marginal because gold is a bauble.
But what about houses? Can you convince the consumer that they want a second, third, fourth, or even fifth house? A single house serves a great deal of utility, the utility of second house is not a great improvement on having that first ppor. For the vast majority the second house has little additional utility and adds a cost and maintenance dimension that may be equal to that of the first house. Much the same with cars, one car may serve a lot of utility but the second car adds maintenance costs with little additional utility.
The next trick of our glorious banks will be to charge us a fee for using net bank!!! You are no longer customer, you are property!!!
MIW, Do you think that the Chinese are any more, or less likely to act in a herd mentally compared to other nationalities?
I haven't noticed any particular difference. There are smart and dumb Chinese just like everywhere else.
I expect some fools will sell their homes and rent and have their arses kicked, just like in Sydney.
The main thing that is different here is that the govt has its foot firmly planted on the neck of the BJ RE market trying, so far unsuccessfully, to cool it down. Anyone taking a bet on the market taking a dive has the additional risks that the govt could remove some of the purchasing restrictions and/or the pollution situation could continue to be a lot better than last year and people decide that it is under control again.
Yeah. I wouldn't be too worried about well-located stuff in Beijing either. I'd be more worried if I had something high-end outside the 5th ring though. There is added worry for Beijing which is a lot of people moving out because of the pollution issues. Some of them are going to Shanghai which historically has been much better. This winter has been a lot better than last winter so far, so maybe that will stop.
The headhunters are pretty desperate to get people to take positions in Beijing lately. People with kids just won't move here. And your point is? Real estate corrects every few years. Unless you actually own it, it doesn't really matter that much.
Even if you own it, it doesn't matter all that much unless you are trying to trade in real estate.
And sometimes real estate crashes.
In fact, it happens quite often.
And when it does lots of people get hurt.
and China is looking like the world's largest property bubble right now.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
and China is looking like the world's largest property bubble right now.
China is a big place, right at this moment just about every phase of the property cycle is happening somewhere, and prices vary very widely. For example new apt developments in Beijing are selling for up to 70,000RMB/sqm whereas in Shangqiu, a city of about 7M in Henan, it is more like 7,000RMB/sqm.
You only show your ignorance by making statements like "China is in a property bubble"
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
China is a big place, right at this moment just about every phase of the property cycle is happening somewhere, and prices vary very widely. For example new apt developments in Beijing are selling for up to 70,000RMB/sqm whereas in Shangqiu, a city of about 7M in Henan, it is more like 7,000RMB/sqm.
You only show your ignorance by making statements like "China is in a property bubble"
By that logic, it would be just as ignorant to say that the US had a property bubble seeing as some parts of that country had real estate busts and others did not.
So, is one ignorant, if one refers to a "US property bubble"???
Anyway, if it walks like a duck and quacks like a duck...
Quote:
So there haven't been any big reforms. There's been a big credit bubble instead. Local governments and developers have gone on a borrowing binge the past five years to build new infrastructure and new cities, including ghost ones. In other words, China is getting rich now by building the things it needs to be rich, and putting it all on the credit card. The result, as the ratings agency Fitch points out, has been a bigger credit increase relative to GDP than just about anywhere else in history. As you can see in the chart below from Credit Suisse, total credit shot up from around 120 percent of GDP in 2008 to 190 percent today—most of it from so-called "shadow banks" that aren't regulated. In comparison, U.S. credit "only" went up 40 percentage points of GDP in the five years before the housing bubble popped.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
I expect some fools will sell their homes and rent and have their arses kicked, just like in Sydney.
The main thing that is different here is that the govt has its foot firmly planted on the neck of the BJ RE market trying, so far unsuccessfully, to cool it down. Anyone taking a bet on the market taking a dive has the additional risks that the govt could remove some of the purchasing restrictions and/or the pollution situation could continue to be a lot better than last year and people decide that it is under control again.
Quote:
I haven't noticed any particular difference. There are smart and dumb Chinese just like everywhere else.
I ask because I live in Sunnybank. I've noticed in retail sales that Chinese Australians in this area certainly behave in a mob fashion.
China’s economic growth slowed in the fourth quarter as gains in factory output and investment spending eased last month, sapping momentum as a credit clampdown adds pressure on the outlook for this year.
Gross domestic product rose 7.7 per cent in the October-December period from a year earlier and 1.8 per cent from the prior quarter, the National Bureau of Statistics said. Asian stocks pared declines and the Australian dollar and copper erased losses after year-over-year GDP exceeded the median estimate of analysts in a Bloomberg survey.
Any deeper slowdown would test leaders’ willingness to implement the broadest policy shifts since the 1990s and tackle debt-fueled investment, after President Xi Jinping scrapped a goal of “relatively fast” growth in his first year in power. The world’s second-largest economy may expand at the weakest pace in almost a quarter century in 2014, a survey showed last month, as spending on infrastructure and factories moderates.
“Growth momentum is clearly weakening,” said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong. “The slowdown became increasingly clear as the quarter progressed.”
The benchmark Shanghai Composite Index (SHCOMP) of stocks was down 0.1 per cent at 10:07 a.m. local time, while the yuan was weaker against the dollar. The MSCI Asia Pacific Index of stocks fell 0.2 per cent.
GDP expanded 7.7 per cent in 2013, the statistics bureau said, the same pace as in 2012. The economy is forecast to expand 7.4 per cent this year, according to an analyst survey last month, the slowest pace since 1990.
Common technique for store opening or sales is to pay students to line up outside....
People will join a line before even asking what its for
Of course there are never queues outside Aussie stores on Boxing day.
The question was whether there was more of a herd mentality in China than in Australia. That's much harder to answer, especially given that we all have confirmation bias to some degree and that we tend to be blind to our own foibles to a greater extent than we are blind to the foibles of others.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
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