China's Housing Market Keeps On Tumbling
905 sats \ 23 comments \ @TomK 30 Jun econ
China’s property market continues to face severe challenges, with plummeting prices pressuring bank balances and borrowers. In response, the central bank has pledged nearly $42 billion in affordable loans to enable state-owned entities to acquire unsold properties and convert them into affordable housing. This nationwide initiative marks a critical moment for the sector.
Local governments in several cities have piloted similar programs, but this is the first time such measures are implemented on a national scale. The plan also includes reduced down payment requirements for first- and second-time homebuyers and eliminates the minimum mortgage interest rates amid already low average rates.
Despite past interventions since 2020, major developers like China Evergrande have defaulted, leaving countless unfinished homes and massive debts.
China’s real estate sector, which once made up 20% of the GDP, now burdens local governments with $15 trillion in debt. This year’s policy measures aim to spur economic growth by 5%.
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84 sats \ 5 replies \ @Coinsreporter 30 Jun
There's a huge mistrust between public and government and that is causing more and more fall in real-estate in China. I doubt if they can stop it before the whole nation breaksdown
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11 sats \ 4 replies \ @TomK OP 30 Jun
and then, in parallel, I would like to see the re-emergence of America as a land of freedom, free markets and liberality. that would be a pleasure
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42 sats \ 3 replies \ @Coinsreporter 30 Jun
That would be a pleasure only if they can can fight out their inflation ghosts!
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20 sats \ 2 replies \ @TomK OP 30 Jun
in the long run, there can be no healthy rise of America unless one day the Fed is destroyed
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42 sats \ 1 reply \ @Satosora 30 Jun
The fed doesnt need to be destroyed, just limited and minimized.
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0 sats \ 0 replies \ @TomK OP 30 Jun
if you can give me an argument as to why there needs to be central banks at all, when we could have free competition between currencies for the best solution, then okay
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84 sats \ 1 reply \ @TheBTCManual 30 Jun
What I am wondering is when this spreads outside china, a lot of chinese investors were using US, Canadian and AU real estate as a hedge, but if they hit negative gearing on their local property, shouldn't they be forced to dump their international holdings and bring that capital back home?
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0 sats \ 0 replies \ @TomK OP 30 Jun
yes, it depends on the type of investor. many hedge funds, pension funds and others who have been allowed to invest in China are likely to have made considerable write-downs over the last two years. this is a problem that i would describe as the export of deflation, and one that will continue to occupy us. it is possible that this deflationary shock will one day turn into a global deflationary crisis on the asset markets. who knows? there is too much concealment, we have too little information, and we are now seeing how many German banks have suffered considerable losses in the commercial real estate sector in America, for example.
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42 sats \ 1 reply \ @IamSINGLE 1 Jul
And here in India real 3state is in a bubble. Two neighbours with contrasting factors.
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0 sats \ 0 replies \ @TomK OP 1 Jul
All bubbles finally find their needle!
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42 sats \ 2 replies \ @SatsMate 30 Jun
Will they cut even on these if they use them for affordable housing?
I think someone is taking the hit big time and that is probably the developer or the Chinese government if they offer bailouts.
I can't believe they overbuilt to this extent. I've always thought China had things buttoned up pretty well from an economics standpoint, but this proves the opposite.
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76 sats \ 1 reply \ @02bcd3eeb0 30 Jun
It's almost like central planning doesn't work.
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0 sats \ 0 replies \ @TomK OP 30 Jun
And I would have to rethink everything
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42 sats \ 0 replies \ @Satosora 30 Jun
Its only going to get worse. You cant prop up an inflated market forever. Especially with all of those ghost cities and malls.
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42 sats \ 3 replies \ @Undisciplined 30 Jun
They really needed that correction. Home prices in Chinese cities were absolutely insane.
This is such a good example of why you shouldn't count government spending in GDP. Real estate was not 20% of economic productivity in China, because it was not productive economic activity.
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42 sats \ 2 replies \ @TomK OP 30 Jun
if we here in Europe exclude government spending, then statistically we are shooting ourselves back into the late Middle Ages... that, in retrospect, if things continue like this, may even turn out to be a golden age compared to the present day
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42 sats \ 1 reply \ @Undisciplined 30 Jun
if we here in Europe exclude government spending, then statistically we are shooting ourselves back into the late Middle Ages
Yep, people might realize what they've done if the stats were accurate.
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42 sats \ 0 replies \ @TomK OP 30 Jun
i'm not sure when the definition of GDP was changed again. however, GDP used to be measured only on the basis of private sector activity, which is perfectly correct. A small side note on statistical manipulation: in Germany, the first institutes and state institutes are starting to show only the employment rate on the labor market. This means that people are already being indirectly prepared for a massive increase in unemployment
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0 sats \ 0 replies \ @16d86e9daa 30 Jun
i believe one of the reasons why why china housing market keeps on tumbling is due to the Slower economic expansion which can lead to reduced demand for housing as people become more cautious about investing in property.
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0 sats \ 0 replies \ @amespa986 30 Jun freebie
The housing market in China continues to experience a downward trend, with prices falling and sales dropping. According to data from the National Bureau of Statistics, housing prices in major cities fell by an average of 0.4% in December, marking the fifth consecutive month of decline.
The ongoing trade war with the United States, tighter lending regulations, and an oversupply of housing inventory are some of the factors contributing to the slump in the market. Additionally, the outbreak of the coronavirus has further dampened the market, as potential buyers are hesitant to make big financial commitments amid the uncertainty.
Investors are also wary of the market, with many opting to wait and see how the situation unfolds before making any significant investments. This has led to a decrease in new construction projects, further exacerbating the oversupply issue.
Despite efforts by the Chinese government to stimulate the market, such as reducing interest rates and easing lending restrictions, the housing market in China is expected to continue to decline in the near future.Experts predict that prices could drop even further in the coming months, posing challenges for both developers and buyers alike.
42 sats \ 2 replies \ @NaOD 30 Jun outlawed
stackers have outlawed this. turn on wild west mode in your /settings to see outlawed content.