A China Real Estate Overview. What Next On Prices?
Figuring out future real estate prices in China is "above my pay grade," but for those interested in an in-depth review of the current thinking on this issue, I recommend you go to the China Economics Blog post, "Housing Crisis in China: An overview." The post sets out an all-star lineup of articles on China real estate, pulling from Forbes, The Economist, The International Herald Tribune, The Wall Street Journal, and Danwei.
The consensus is that things are not good.
Comments (2)
Read through and enter the discussion by using the form at the endTony - November 3, 2008 9:32 AM
Actually, I'd say the news is good. Chinese real estate is/was in a bubble, and the sooner it falls, the better. Just like the US bubble would've been less painfully popping earlier.
And, lower real estate prices are good news - a home is a place to live, not a retirement plan.
greg - November 3, 2008 2:47 PM
Agreed with Tony.
Real estate has sucked in an increasingly bigger share of Chinese middle-class's saving and income, making them less able to spend more on other consumptions. Chinese cities have also depended on, to a large extent, the revenue from land sales to finance their spendings, especially the infrastructure development. It is unsustainable.
The real estate prices need to go down substantially, probably 30-50% from those of earlier this year in order to stimulate healthy demands again. There are large potential demands and cash waiting on the sideline. Some developers will go out of business; banks will incur some bad loans. But they're all within the acceptable range. Once the bubble is burst, we'll be back to normal and healthier real estate market.
The Chinese government has recently allowed provincial/local governments to issue municipal bonds, potentially reducing their reliance on revenue from land sales, although this may create other risks.