Even though it is for commercial real estate, and won’t be as sensitive to the turmoil in residential real estate market, it could still serve as a good reference.
Read More:
Not sure how assuring this is. But the measures cited in the news sound very familiar:
And in a related note, China’s biggest builder by square footage sold, Hengda, has announced a strategic 15% drop in price for properties they develop and sell in China. Even though 15% isn’t very much compared to last year’s run-up in prices, it would be interesting to see whether this will trigger domino effect among other builders.
I am not a big fan of the 2012 movie, but this is what Andy Xie (former chief Asia economist at Morgan Stanley, now an independent economist) said,
Chinese real estate market is 100 percent overvalued and that the intrinsic value of the Shanghai Composite Index is 2,000 points
He went one step further predicting that China’s stock and real estate markets will decline slightly in the fourth quarter of this year, with a large decline coming in 2012. Xie has been preaching this since last August.
There are a couple of interesting reports floating around on China Daily recently.
China needs three decades to make homes affordable
According to Chen, China has built about 70 million residential apartments in its urban areas in the past decade, which equals to one-third of the households. The figures indicated that only three or four out of 100 households moved into new apartments each year.
"China faces a severe housing shortage," Chen said. "Even if apartments didn’t cost any money, four units wouldn’t turn into 70 apartments."
Very interesting comments. On one hand, there is a “severe housing shortage” based on demand projection, which maybe partially explains why the housing price is shooting up so rapidly. On the other hand, housing price has driven the ordinary Joes out of the market. In cities like Ordos, a large percentage of apartments are empty, either unsold or horded by empty-nester investors, creating ghost cities like the one featured on Time.