Saturday, November 5, 2011

Meanwhile... on the topic of Real Estate in China

We continue to monitor the chatter on the move by the CME to increase margins to 100% for all commodities; a move many believe that will lead to widespread margin calls for small and medium investors on Monday and widespread liquidations after that. We will update when we have more to contribute.

Meanwhile the blog World Housing Bubble has brought our attention to another excellent article on Real Estate in Beijing, China.

Titled "Home price-cuts get steeper, more extensive in China", China's news agencies are telling us that there is now a stunning 22 months of inventory available for sale in Beijing.
  • "According to the Centaline Property Agency, a supply of 9,152 new homes in October has added Beijing's total house supply to 118,000 units, a new high since June 2009. It would take 22 months to consume the inventory even if there were no new supply, said the agency."
Zhang Yue, chief analyst with Home Link China, a leading real estate agency, said with large trading volume and strict government curbs, Beijing is seen as bellwether for the market. He says price-cuts will get stronger in the fourth quarter and that in Beijing, 53 of this year's 90 new residential projects have already started to offer discounts.

As if that wasn't enough, Zhang Dawei, an analyst from the Centaline Property Agency, said the first-tier cities have come very close to the house price turning point.
  • "If the government continues to maintain firm curbs on the real estate market, house prices will reach a turning point in March next year."
Chang Zhi, chief analyst of Century 21 China Real Estate, said he expects more real estate companies in the second- and third- tier cities to follow large firms' steps to cut house prices under the current policy.
  • "A new round of home-price declines may come in one or two months."
China is no different from anywhere else.

As Real Estate values collapse people run into credit problems.  As credit problems mount, assets have to be liquidated to pay bank loans.

Given the choice between liquidating assets at home and liquidating assets abroad... assets abroad will most often be liquidated first.

The question is: how will Vancouver be affected by a rash of Asian owned property liquidations in our city?


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  1. "The question is: how will Vancouver be affected by a rash of Asian owned property liquidations in our city?"

    If the houses are bought with ill-gotten cash through business frauds and white-collar crimes, it is just as effective as using the casinos' tumble-dry cycle.

  2. ^ just one of many factors conspiring to raze this local industry to the ground. What makes money in this town anyway? Real estate, tourism, HQs for mining, and shipping. All not great businesses to be in when down turns magnify damage of over leveraged everything.