17-09-2023, 01:29 PM
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17-09-2023, 03:48 PM
An insight into China property market.
China’s Way of Handling Property Bubble Might Not Be What Many People Expect
https://www.voanews.com/a/7240884.html
China’s Way of Handling Property Bubble Might Not Be What Many People Expect
https://www.voanews.com/a/7240884.html
17-09-2023, 06:33 PM
China real estate - the worst is yet to come.
Dilemma of in-completed property owners.
Professional deadbeats seen
https://youtu.be/AjeyeZq3T30?si=rYoNMS1TU7k5UDTq
Dilemma of in-completed property owners.
Professional deadbeats seen
https://youtu.be/AjeyeZq3T30?si=rYoNMS1TU7k5UDTq
18-09-2023, 11:30 AM
(17-09-2023, 06:33 PM)Yoyo Wrote: [ -> ]China real estate - the worst is yet to come.
Dilemma of in-completed property owners.
Professional deadbeats seen
https://youtu.be/AjeyeZq3T30?si=rYoNMS1TU7k5UDTq
It is ironic to see China's own property crisis to be inverted compared to US 2008 subprime.
US 2008 subprime: borrowers could get mortgages based on paying nothing.
China's property crisis: borrowers get mortgages based on paying almost everything.
In US case, the financial institutions were the ones holding the hot potato, since many mortgages had little down payment. In China's case, the individual borrowers are the ones holding the hot potato since they paid lots of down payment.
In US case, the financial institutions were eventually bailed out by a capitalist government. I guess there is no surprises what the pseudo capitalist-socialist Chinese government will eventually do - Borrowers will probably be made whole and also no surprises who will be the losers. I see the one key difference is that China had implemented plenty of property cooling measures in the past. Will simply unwinding them help a lot? Also, everything is controlled by the Chinese Gov - no democratic elections, banks, agencies execution of policies etc. Will this help too?
In both cases, rising property prices were one of the ballast to keep their economy booming. So dropping property prices will definitely have a contagion effect on all sectors.
18-09-2023, 01:20 PM
Agree that China property will not be another subprime:
1) The government orchestrated this in 2018-19 with the 3 red lines to force developers to delever. Evergrande IIRC had like $500b in debt at the peak. developers started spinning off their Services subsidiary to raise cash and COLI or Vanke ask staff to tighten belt but 2019 sales turned out to be the best ever. It just takes time
2) Chinese everywhere naturally love and holds property long term. Americans and Europeans generally not so much fascination about property which is one reason why the property boomed out of control pre-GFC as it's unprecedented herd behavior as the middle class do not like the idea of being tied down and likes to move around.
3) Pundits were saying China will not clamp down on tech or property as it is huge % of GDP or FAI. Or touch HK. Sometime for Taiwan to learn. And China will demonstrate it will survive after these clamp downs. But I do worry about Xi undoing Deng's progress.
That's not to say this speed bump will not hurt China but they have more or less achieved their asset deflation goals. The execution however is still as blunt and draconian. But it is not unplanned nor no signals. Should be obvious to China watchers not so for reporters. Similarly Japan is planning for inflation since last year. Let it not be deemed as an accident next year
1) The government orchestrated this in 2018-19 with the 3 red lines to force developers to delever. Evergrande IIRC had like $500b in debt at the peak. developers started spinning off their Services subsidiary to raise cash and COLI or Vanke ask staff to tighten belt but 2019 sales turned out to be the best ever. It just takes time
2) Chinese everywhere naturally love and holds property long term. Americans and Europeans generally not so much fascination about property which is one reason why the property boomed out of control pre-GFC as it's unprecedented herd behavior as the middle class do not like the idea of being tied down and likes to move around.
3) Pundits were saying China will not clamp down on tech or property as it is huge % of GDP or FAI. Or touch HK. Sometime for Taiwan to learn. And China will demonstrate it will survive after these clamp downs. But I do worry about Xi undoing Deng's progress.
That's not to say this speed bump will not hurt China but they have more or less achieved their asset deflation goals. The execution however is still as blunt and draconian. But it is not unplanned nor no signals. Should be obvious to China watchers not so for reporters. Similarly Japan is planning for inflation since last year. Let it not be deemed as an accident next year
18-09-2023, 05:37 PM
The property prices collapse in china may result in developers asset/land bank being of lower value than their debts. This will lead to a total collapse of private real estate developers.
The second problem is that property values will plummet in China due to the lack of new population and immigration. When there are too many houses "chasing too few people", it leads to a falling house prices. It is well known that most Chinese hold at least 2 properties due to speculation. The simple loss of thei value of the second home is akin to being wiped out in the stock market, the second order effect is that China consumers will have to restart saving again due to the loss of value of their second/third home
The outcome is that it is not a subprime, but still in China the losers are the China Citizens.
The second problem is that property values will plummet in China due to the lack of new population and immigration. When there are too many houses "chasing too few people", it leads to a falling house prices. It is well known that most Chinese hold at least 2 properties due to speculation. The simple loss of thei value of the second home is akin to being wiped out in the stock market, the second order effect is that China consumers will have to restart saving again due to the loss of value of their second/third home
The outcome is that it is not a subprime, but still in China the losers are the China Citizens.
20-09-2023, 10:46 PM
I think the move at least shows the authorities are investor friendly ?
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https://www.businesstimes.com.sg/compani...ket-plunge (emphasis added)
"...Firms may further increase their payouts after the country’s securities watchdog recently urged domestic companies to pay good dividends. Those that do not meet a certain payout ratio will be asked for an explanation, the Shanghai Securities Journal reported on Tuesday (Sep 19)...."
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https://www.businesstimes.com.sg/compani...ket-plunge (emphasis added)
"...Firms may further increase their payouts after the country’s securities watchdog recently urged domestic companies to pay good dividends. Those that do not meet a certain payout ratio will be asked for an explanation, the Shanghai Securities Journal reported on Tuesday (Sep 19)...."
21-09-2023, 10:22 AM
(20-09-2023, 10:46 PM)dreamybear Wrote: [ -> ]I think the move at least shows the authorities are investor friendly ?
----------------
https://www.businesstimes.com.sg/compani...ket-plunge (emphasis added)
"...Firms may further increase their payouts after the country’s securities watchdog recently urged domestic companies to pay good dividends. Those that do not meet a certain payout ratio will be asked for an explanation, the Shanghai Securities Journal reported on Tuesday (Sep 19)...."
hi dreamybear,
Authorities are investor friendly until they are not. They are not investor friendly until they are.
I wonder who are the biggest shareholders and tax collector (10% withholding tax on dividend in China) of these "investor friendly" actions?
26-09-2023, 04:52 PM
The simple logic is.....if the 3 red lines started the end of the property boom in China, then the same authorities who started it, should have the levers to reverse it?
China property recovery up to a year away, ex-PBOC adviser says
Sales in China’s largest cities could return to growth in the next four to six months, but in smaller cities “it will take anything between six months to one year for a good recovery”, Li Daokui, a former member of the People’s Bank of China (PBOC) monetary policy committee, said.
https://www.businesstimes.com.sg/propert...viser-says
China property recovery up to a year away, ex-PBOC adviser says
Sales in China’s largest cities could return to growth in the next four to six months, but in smaller cities “it will take anything between six months to one year for a good recovery”, Li Daokui, a former member of the People’s Bank of China (PBOC) monetary policy committee, said.
https://www.businesstimes.com.sg/propert...viser-says
28-09-2023, 12:32 AM
(26-09-2023, 04:52 PM)weijian Wrote: [ -> ]The simple logic is.....if the 3 red lines started the end of the property boom in China, then the same authorities who started it, should have the levers to reverse it?
China property recovery up to a year away, ex-PBOC adviser says
Sales in China’s largest cities could return to growth in the next four to six months, but in smaller cities “it will take anything between six months to one year for a good recovery”, Li Daokui, a former member of the People’s Bank of China (PBOC) monetary policy committee, said.
https://www.businesstimes.com.sg/propert...viser-says
I don't think China can crawl out from this crisis so easily. Imagine average households 70% of asset are held up by properties yet the properties has either ended up rotten tail unfinished or even finished the value has dropped maybe at least like 25%, which mean the loan could be higher than value.
I don't know how such circumstance people will still optimistic on buying homes. And i heard the population is declining fast and the current housing market has much more supply than demand due to overbuilding.
The 3 red lines policy might be the catalyst but these are not the cause in fact it wanted to prevent catastrophe. Too bad the its too late and the developers and the homebuyers are too over-leveraged. Now reversing the policies might not bring the deceased back to life.
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