Chinese Property Bubble
Discussion
Eric Mc said:
Reports on Radio 4 this morning indicate that this is about to go pop soon - and that Chinese banks are, at the moment, largely insolvent.
I wonder what the ramifications of this might be.
You are probably better qualified than most of us to answer the question.I wonder what the ramifications of this might be.
Does this mean that the Chinese will be less likely to buy up Portoguese/Italian/French bonds at the next auction? If so, then Merkozy will be crapping themselves.
Don
--
This has been on the horizon for a good while. Regions have been maintaining their centrally dictated GDP targets by commissioning huge projects with money borrowed from regional banks. It's like the worst of the planned econmy, combining with the most toxic elements of the free market.
Excellent piece of documentary from SBS in Australia on this: http://www.youtube.com/watch?v=rPILhiTJv7E
There has been a building boom and whole cities have been built which remain vacant. What few flats that have been sold are in the hands of wealthy middle class specualtive/BTL buyers, but with prices for flats in these places are at 10x average earnings, so effectively they are not even rentable (at commerically sane yields) and there is no logical end in sight.
Build quality, as with more than a few Chinese infrastructure and civil engineering is often also sub-par. 13 story flats are built on plots given permission for 9 storey, but without any alterations to foundations, with obvious results.
Excellent piece of documentary from SBS in Australia on this: http://www.youtube.com/watch?v=rPILhiTJv7E
There has been a building boom and whole cities have been built which remain vacant. What few flats that have been sold are in the hands of wealthy middle class specualtive/BTL buyers, but with prices for flats in these places are at 10x average earnings, so effectively they are not even rentable (at commerically sane yields) and there is no logical end in sight.
Build quality, as with more than a few Chinese infrastructure and civil engineering is often also sub-par. 13 story flats are built on plots given permission for 9 storey, but without any alterations to foundations, with obvious results.
I was reading an article last week, Bejing house prices fell 35% last month alone, a huge bubble is about to burst.
If you look at the quality of the housing built (as posted above) and the recent rapid inflation in house prices coupled with the falling demand for Chinese goods due to the wider economic climate (net exporter) and overspending on infrastructure by the government in the boom times (even now) it was always on the cards to e honest...
If you look at the quality of the housing built (as posted above) and the recent rapid inflation in house prices coupled with the falling demand for Chinese goods due to the wider economic climate (net exporter) and overspending on infrastructure by the government in the boom times (even now) it was always on the cards to e honest...
Edited by kiethton on Thursday 22 December 08:31
I saw the UK "model" with Houses being built nobody wanted or could afford collapsing in 2006. Personally I was surprised it lasted as long after that date! They are still persisting with it to date. They need to realise that it causes over supply and the properties built are not desirable to the type of buyer they are after.
kiethton said:
Digga]b]About[/b said:
to burst? 35%?!
Even the most over-priced crap on the UK market has barely replicated that sort of plunge.
In that city it has, falls that steep havnt been replicated in others as Far as I know as of yet but aren't far away so a wider fall is on the cardsEven the most over-priced crap on the UK market has barely replicated that sort of plunge.
I have no doubt that the East is going to catch the West's cold soon. The question is whether there is enough demand within the region to see Asia through the inevitable down-turn. At least governments out here have small/no welfare states, and less government debt (excluding Japan)although the state of the Chinese regional banks is a concern, as they have overstretched their lending considerably.
Bing o said:
Care to evidence that as I can't see anything on Google to support your assertion. The Chinese government have been trying to cool house price inflation for the past couple of years, contrast this with the US and UK which positively encouraged it to drive growth in their economies.
I have no doubt that the East is going to catch the West's cold soon. The question is whether there is enough demand within the region to see Asia through the inevitable down-turn. At least governments out here have small/no welfare states, and less government debt (excluding Japan)although the state of the Chinese regional banks is a concern, as they have overstretched their lending considerably.
I have no doubt that the East is going to catch the West's cold soon. The question is whether there is enough demand within the region to see Asia through the inevitable down-turn. At least governments out here have small/no welfare states, and less government debt (excluding Japan)although the state of the Chinese regional banks is a concern, as they have overstretched their lending considerably.
It was in an industry magazine, property week or costar the a few weeks ago
Digga]b]About[/b said:
to burst? 35%?!
Even the most over-priced crap on the UK market has barely replicated that sort of plunge.
Im pretty sure its bad daily mail type reporting. Probably 35% on an annualized basis kind of thing...Even the most over-priced crap on the UK market has barely replicated that sort of plunge.
I just bought a chinese made monitor. The instructions are in similarly un-decipherable engrish.
I'll post this again, from Larry Lang, chair professor of Finance at the Chinese University of Hong Kong - http://globaleconomicanalysis.blogspot.com/2011/11...
Every province of China is compared to Greece.
"He said that the regime doesn’t listen to experts, and that Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said."
Property bubble is going to burst and there's no money to maintain provinces.
Cue the revolution and the fall of communist China.
Every province of China is compared to Greece.
"He said that the regime doesn’t listen to experts, and that Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said."
Property bubble is going to burst and there's no money to maintain provinces.
Cue the revolution and the fall of communist China.
FourWheelDrift said:
I'll post this again, from Larry Lang, chair professor of Finance at the Chinese University of Hong Kong - http://globaleconomicanalysis.blogspot.com/2011/11...
Every province of China is compared to Greece.
"He said that the regime doesn’t listen to experts, and that Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said."
Property bubble is going to burst and there's no money to maintain provinces.
Cue the revolution and the fall of communist China.
If their experts are as good as our experts, im not sure thats necessarily a bad thing!Every province of China is compared to Greece.
"He said that the regime doesn’t listen to experts, and that Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said."
Property bubble is going to burst and there's no money to maintain provinces.
Cue the revolution and the fall of communist China.
From what I was hearing on Bloomberg this morning some experts are predicting a huge dip in the Chinese economy growth, however the analysts was saying he doubts it very much and is more of just a decline in growth than a big hit.
As for China buying bonds, they are still in Surplus by quite a large amount and have been preparing for the past couple of years. So they can still go on a shopping spree if need be.
As for China buying bonds, they are still in Surplus by quite a large amount and have been preparing for the past couple of years. So they can still go on a shopping spree if need be.
Here are a couple of interesting articles:
http://news.yahoo.com/china-rescue-economy-2305465...
http://news.yahoo.com/china-businesses-blame-gover...
http://news.yahoo.com/china-rescue-economy-2305465...
http://news.yahoo.com/china-businesses-blame-gover...
Digga said:
This has been on the horizon for a good while. Regions have been maintaining their centrally dictated GDP targets by commissioning huge projects with money borrowed from regional banks. It's like the worst of the planned econmy, combining with the most toxic elements of the free market.
Excellent piece of documentary from SBS in Australia on this: http://www.youtube.com/watch?v=rPILhiTJv7E
There has been a building boom and whole cities have been built which remain vacant. What few flats that have been sold are in the hands of wealthy middle class specualtive/BTL buyers, but with prices for flats in these places are at 10x average earnings, so effectively they are not even rentable (at commerically sane yields) and there is no logical end in sight.
Build quality, as with more than a few Chinese infrastructure and civil engineering is often also sub-par. 13 story flats are built on plots given permission for 9 storey, but without any alterations to foundations, with obvious results.
What are you Digga, the daily mail?!? Excellent piece of documentary from SBS in Australia on this: http://www.youtube.com/watch?v=rPILhiTJv7E
There has been a building boom and whole cities have been built which remain vacant. What few flats that have been sold are in the hands of wealthy middle class specualtive/BTL buyers, but with prices for flats in these places are at 10x average earnings, so effectively they are not even rentable (at commerically sane yields) and there is no logical end in sight.
Build quality, as with more than a few Chinese infrastructure and civil engineering is often also sub-par. 13 story flats are built on plots given permission for 9 storey, but without any alterations to foundations, with obvious results.
That block toppled over due to them digging an underground carpark at the front, and placing the spoil at the rear of the block, which was already on a slope. The obvious then happened.
Highlighting your point though about build quality.
_Batty_ said:
Digga said:
This has been on the horizon for a good while. Regions have been maintaining their centrally dictated GDP targets by commissioning huge projects with money borrowed from regional banks. It's like the worst of the planned econmy, combining with the most toxic elements of the free market.
Excellent piece of documentary from SBS in Australia on this: http://www.youtube.com/watch?v=rPILhiTJv7E
There has been a building boom and whole cities have been built which remain vacant. What few flats that have been sold are in the hands of wealthy middle class specualtive/BTL buyers, but with prices for flats in these places are at 10x average earnings, so effectively they are not even rentable (at commerically sane yields) and there is no logical end in sight.
Build quality, as with more than a few Chinese infrastructure and civil engineering is often also sub-par. 13 story flats are built on plots given permission for 9 storey, but without any alterations to foundations, with obvious results.
What are you Digga, the daily mail?!? Excellent piece of documentary from SBS in Australia on this: http://www.youtube.com/watch?v=rPILhiTJv7E
There has been a building boom and whole cities have been built which remain vacant. What few flats that have been sold are in the hands of wealthy middle class specualtive/BTL buyers, but with prices for flats in these places are at 10x average earnings, so effectively they are not even rentable (at commerically sane yields) and there is no logical end in sight.
Build quality, as with more than a few Chinese infrastructure and civil engineering is often also sub-par. 13 story flats are built on plots given permission for 9 storey, but without any alterations to foundations, with obvious results.
That block toppled over due to them digging an underground carpark at the front, and placing the spoil at the rear of the block, which was already on a slope. The obvious then happened.
Highlighting your point though about build quality.
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