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China's Real Estate Bubble


brker_guy
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I've been hearing about China's RE bubble for three years now.

 

http://www.coverjunkie.com/uploads/1319155062.jpg

 

But I've also heard the theory that since a large part of each retail real estate purchase is made with cash (instead of good ol' American style no money down, interest only, blah, blah blah...) there really is no bubble.

 

http://www.cbsnews.com/video/watch/?id=50142079n

 

What do you think?

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Prices have risen dramatically and are above 30 times the average annual income.  They have no real alternative to invest their new found money, so it goes into real estate.  But it only goes there as long as prices are flat or rising.  As soon as prices start to drop, you will see money stop flowing...it's a self-fullfilling cycle...always ends in a bust whether it is in 3 years or 10 years.  The developers are already extremely overleveraged and have shut down so many developments.  I think China is the greatest real estate bubble in history!  Cheers! 

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Prices have risen dramatically and are above 30 times the average annual income.  They have no real alternative to invest their new found money, so it goes into real estate.  But it only goes there as long as prices are flat or rising.  As soon as prices start to drop, you will see money stop flowing...it's a self-fullfilling cycle...always ends in a bust whether it is in 3 years or 10 years.  The developers are already extremely overleveraged and have shut down so many developments.  I think China is the greatest real estate bubble in history!  Cheers! 

 

So the "value" seems to be in being short the bubble.

 

Is there a doctor in the house? ;)

 

http://www.entmoney.com/wp-content/uploads/2011/07/wall-street-profiteers1.jpeg

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  • 1 year later...

Something is happening......

 

http://www.nytimes.com/2014/12/19/business/international/in-china-housing-market-pressure-to-sell-hesitation-to-buy.html?ref=business

Prices for newly constructed housing fell 1 percent to 9 percent in recent months in all 70 mainland cities tracked by the national government, according to data released Thursday. Prices kept falling in November compared with October in all but three cities, where they were unchanged.

Yet real estate developers’ inventories of unsold apartments now equal 12 to 18 months’ worth of sales in China’s biggest cities, like Beijing and Shanghai, according to Haitong Securities, a big Chinese brokerage firm and investment bank. The industry considers six months’ worth of inventory to be healthy.

While the property market is under pressure, a crisis does not appear imminent. State-owned banks are reluctant to foreclose on borrowers in arrears, and few buyers are forced to sell at a loss.

 

Anne Stevenson Yang's latest interview.  She was at last years FFH AGM

 

http://online.barrons.com/articles/anne-stevenson-yang-why-xi-jinpings-troubles-and-chinas-could-get-worse-1417846773

We track the 400 Chinese consumer companies listed on the Shanghai and Shenzhen stock markets, and in the third quarter, their gross revenues fell 4% from a year ago. This is hardly a vibrant economy. Also says 50 million units owned but empty

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  • 2 weeks later...

More China

 

http://dealbook.nytimes.com/2014/12/29/seeking-to-ride-on-chinas-stock-market-highs/?hp&action=click&pgtype=Homepage&module=second-column-region&region=top-news&WT.nav=top-news&_r=0

 

“Almost everyone I know is investing, so I think I should be investing, too,” said Mr. Kuang, 51.

“The index has been rising this year,” he added. But his own stock portfolio’s performance, he said, was essentially flat.

 

China has been grappling with a slowing economy, falling property prices and increasingly tight financing conditions. But the country’s stock markets have been surging, thanks in large part to regular investors like Mr. Kuang.

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