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Greets All,

I don't know exactly where this post might be most useful, but it might be somewhat significant because I've been waiting for this as a possible sign the China real estate bubble is finally allowed to pop. Popping is a controlled event, unlike a balloon.

Watching the news here.

CCTV March 30, 2011 around noon China Time
1. The high end real estate market developers are hanging on to their asking prices, but not much luck finding buyers.
2. The 2nd hand market are said to be dumping their units to get out what profits they can.
3. Beijing has due date tomorrow from all cities to submit property curbing programs for 2011. Beijing is leading by example by actually forcing prices lower instead of rising. Some actions include holding auctions for 1st time buyers to side step the speculative market. Some markets near Guangzhao are ignoring this demand. "Price control? crazy talk"
4. 10 minutes later, they got this professor opining that these curbs will not be effective in slowing down the "red hot real estate" market. So, the same news program reporting both dumping and difficulty in controlling the market.
5. 9 provinces in China have detected Ce123 from Japan. People went crazy here last week, bought all existing stocks of salt and soy sauce (confirmed in SH and BJ). Explains why people are walking around with bug-eyes the size of ping pong balls.

Analysis
1. Last month, I saw a CCTV segment talking about the main push at real estate fairs are for overseas investments. I take this to mean that Chinese speculators also believe their markets are saturated, full of empty buildings with new ones going up next to them. I can confirm this from my trip to Singapore over New Years, and 2008 to Sydney. My friends in Toronto and Vancouver confirm that most of the buyers in those markets speak Mandarin (mainlanders).
2. The Chinese who can buy overseas do not borrow money, but are trying to hide (mostly) ill gotten gains out of China.
3. The buyers from 1996-7 spoke Cantonese ("Yacht people" exodus).
4. When I was growing up, Chinese in North America spoke Cantonese (HK or from 1890's railroad days).
5. Many private mom & pop speculators are holding on to several units bought from the days of too-easy credit. My landlord holds seven units that I know of. I know a few former coworkers making 15000 rmb/month who were holding 2-3 units bought 95% from loans. So, if they do not get out, they could be severely under water on multiple mortgages. I expect the banks to take a major hit, but I don't know if the CCP will allow non-connected people to simply walk away like Americans can do.
6. My rent has not gone up since 2007, and has gone down 8% for 2011. Landlord wants me to stay. Like, stay or his unit is empty.
7. With such a highly leveraged bubble, once word is out that the 2nd hand market are dumping units, I think the implosion will spread quickly. This might have global significance affecting how much China buys US treasuries, and affect domestic consumption, including car sales. "Does Mrs. Li need a 3rd car, maybe VW instead of Audi etc".
8. A sudden drop in paper wealth may not help core inflation (still got to eat), but may reduce demand for discretionary goods which in many cases are foreign branded. (Best Buy??? I don't know how much China is part of their overall sales but I recall it is pretty low from a recent article I failed to keep).
9. If the news of the dumping made CCTV today, probably, private phone calls were made to connected people several months ago to get out of the market.
10. I have first hand knowledge of a couple who had been counting on getting loans to buy their first unit but have been rejected since the new banking rules to tighten credit. They came asking me to lend them money. No way.
11. Salt and Soy Sauce hoarding: Some sensational Western media make the Chinese seem irrational and stupid, but a more rational view is that they want a supply of salt and soy sauce mfg'r dated before-2011/03/11, pre-radiation leak from Japan. Some for own family use, some probably speculative to sell on Taobao to the highest bidders. Then, there will be people repacking salt with back dated counterfeit packaging to sell on Taobao. They are very afraid of radiation contamination all over Asia, mostly because they know not to trust govt issued "safe" levels. There is a false belief that salt is made from seawater, but is mostly mined in the Western desert (where they test atomic bombs???).

Take away:
The property bubble may be near popping if CCTV, in a fun way, talked about it, and then got some talking head Ph.D type to counter it. Not sure what his field of expertise was supposed to be. They just have talking heads say whatever they are told to.

WSR
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