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To revalue will be to tighten money supply, raising interest rates, and the bubble will implode? Surely the Chinese government will not want to take the blame. ;)
But time to find an external blame is running out, with real estate prices rising at the rate of 100% to 200% per annum (500% on the tropical island of Hainan), it will only be a matter of months before the bubble collapses onto itself.
http://www.chinadaily.com.cn/china/2...nt_9684907.htm
But time to find an external blame is running out, with real estate prices rising at the rate of 100% to 200% per annum (500% on the tropical island of Hainan), it will only be a matter of months before the bubble collapses onto itself.
http://www.chinadaily.com.cn/china/2...nt_9684907.htm
Collapse predicted as housing prices continue to soar
(Xinhua)
Updated: 2010-04-03 17:57
BEIJING - Predictions have flooded the Internet in China this week about the country's runaway property market collapsing in 2011.
Much of the chatter voiced little concern about the possible severe consequences, instead expressed hope for the crash to come.
Coming at a time when complaints about mounting housing prices are on the rise, the online debate has drawn enormous attention from ordinary residents, industry insiders, experts and received substantive media coverage.
Speculation started after a comparison was made between China's property market and that of Japan. In 1991, Japan's property bubble burst. Following the Japanese yen's appreciation in 1985, large amounts of capital flowed into the country's real estate, inflating prices artificially which eventually led to a burst.
Two decades later, some say the same is happening in China, both in sequence and pace: the yuan appreciated in 2005, capital flowed to property markets in 2006, resulting in soaring housing prices in 2007, and now the burst is imminent.
Hope for a crash?
Feng Zhichao, a thirty-something man, has been living in Beijing for 12 years, since starting college. He is working for a foreign company with a salary of 5,000 yuan ($732.4) per month and pays 750 yuan per month for rent for a room less than 10 square meters.
"House prices in Beijing are crazy! I wish the property market would collapse this year! Then I could buy an apartment of my own in the city and be in the position to think about marriage," he said. "If I were wealthy enough, I would not care about home prices," he added.
Previously owned homes in Beijing stood at 14,000 yuan per square meter in the first quarter of this year, much higher than about 9,300 yuan in the same period of last year, according to the local statistics bureau.
Dong Wei, a 27 year-old Beijinger and an employee with a foreign IT company, said: "I don't believe the property market will crash, as the government will not let that happen. It would be disastrous."
Housing prices will definitely continue to rise, he added.
With a monthly salary of about 8,000 yuan, Dong is seeking a second home of about 80 square meters in the Yayuncun area, around the North Fourth Ring Road in Beijing. Prices of second hand homes in the area averaged 25,000 to 30,000 yuan per square meter.
He said housing prices in his target communities were around 20,000 yuan per square meter before the Spring Festival in February, and increased by 7,000 yuan per square meter during the recent two months. "Despite and because of the fast price growth, I will buy soon if I can find a proper one," he said.
For people who are struggling to buy an apartment in cities, a big market correction will make their dream come true. However, for those who have bought apartments at high prices in recent years and for those who invest for profit, a crash would destroy their dream.
Wang Xu works in Shanghai, the country's business hub, which also has recently seen skyrocketing housing prices. She owns two apartments, so the last thing she wants is a property market burst.
The 28 year-old woman spent about 800,000 yuan on a second home of 60 square meters in Shanghai last March, after she and her husband bought their 30-square-meter first home in 2005 with 290,000 yuan. The first now is more than 600,000 yuan and the second home is now worth more than 1.2 million yuan now.
"If the property market crashes, I will definitely crash at the same time. The money I have invested in the houses would disappear."
"The anticipation of a market collapse shows that people are getting more discontent and impatient as property prices go through the roof and government measures failed to control the prices rise," said Qin Rui, a senior analyst with the Beijing-based 5i5j Real Estate Service.
February home prices in 70 major cities in China climbed 10.7 percent from a year earlier, the fastest pace in almost two years, the National Bureau of Statistics reported. The rapid growth has ignited fears of an asset price bubble and prompted complaints.
Since the end of last year, the government has put in place a series of measures to curb speculative purchasing in an attempt to stabilize prices, including a harsher property sales tax, increased supply of affordable houses, restraining land purchases, and controlling bank credit.
Qin said the influential policies and seasonal factors in the first two months helped stabilize sales and prices for a while at the beginning of this year. However, people had still expected more effective measures to be unveiled from the annual session of the National People's Congress, China's parliament, in March, he said.
Since the parliamentary session, however, sales and prices have resumed the fast rate of growth in major cities.
In Beijing, previously owned home prices stood at 14,650 yuan per square meter at the end of March, 8.8 percent higher than that at the end of the previous month. Second hand home sales were expected to hit 27,000 in March in Beijing, the second largest only after December last year, according to the Centaline Property Agency. March 30 saw sales of 2,273 second hand homes, the record daily high in history.
Slim chance of Japan-style crash
Experts say that China is unlikely to repeat Japan's asset bubble crash since China currently is at a different development stage than Japan was in the 1980s.
The biggest difference was that China was still at a low stage of development and had a large potential for urbanization and property development, said Hao Daming, economist with the China Galaxy Securities.
The urbanization rate in Japan stood at 75 percent in the 1980s, while China would see its rate around 50 percent in 2015, he said.
He said the massive inflow of rural residents into cities would push up real demand for homes, different from Japan's market in 1980s which was fueled more by speculation after the yen's appreciation.
The Bank of Japan said in a report this week that China's current asset price gains were mainly driven by increasing real demand, with more of its population moving to urban areas. This was different from Japan's asset price bubble in the late 1980s, which was driven by speculation, the report said.
Cheng Enfu, a senior scholar at the Chinese Academy of Social Sciences, a government think tank, said another difference was that policies made by the Chinese government tended to be more timely and forceful than Japan's policies because policy-making in Japan was more affected by different interest groups.
He believed that the Chinese government would be able to squeeze out bubbles in the real estate market and achieve a soft landing by adopting a raft of measures.
Premier Wen Jiabao said last month that the government would resolutely curb the abrupt rise in property prices in some cities and satisfy people's basic need for housing.
However, experts held that the online predictions should be taken as a warning about the nation's bubbly property market.
"The bubble is big now," Cheng Enfu said, adding the government must be highly alert on potential risk as it would hurt the country's economy and result in social instability if left uncontrolled.
(Xinhua)
Updated: 2010-04-03 17:57
BEIJING - Predictions have flooded the Internet in China this week about the country's runaway property market collapsing in 2011.
Much of the chatter voiced little concern about the possible severe consequences, instead expressed hope for the crash to come.
Coming at a time when complaints about mounting housing prices are on the rise, the online debate has drawn enormous attention from ordinary residents, industry insiders, experts and received substantive media coverage.
Speculation started after a comparison was made between China's property market and that of Japan. In 1991, Japan's property bubble burst. Following the Japanese yen's appreciation in 1985, large amounts of capital flowed into the country's real estate, inflating prices artificially which eventually led to a burst.
Two decades later, some say the same is happening in China, both in sequence and pace: the yuan appreciated in 2005, capital flowed to property markets in 2006, resulting in soaring housing prices in 2007, and now the burst is imminent.
Hope for a crash?
Feng Zhichao, a thirty-something man, has been living in Beijing for 12 years, since starting college. He is working for a foreign company with a salary of 5,000 yuan ($732.4) per month and pays 750 yuan per month for rent for a room less than 10 square meters.
"House prices in Beijing are crazy! I wish the property market would collapse this year! Then I could buy an apartment of my own in the city and be in the position to think about marriage," he said. "If I were wealthy enough, I would not care about home prices," he added.
Previously owned homes in Beijing stood at 14,000 yuan per square meter in the first quarter of this year, much higher than about 9,300 yuan in the same period of last year, according to the local statistics bureau.
Dong Wei, a 27 year-old Beijinger and an employee with a foreign IT company, said: "I don't believe the property market will crash, as the government will not let that happen. It would be disastrous."
Housing prices will definitely continue to rise, he added.
With a monthly salary of about 8,000 yuan, Dong is seeking a second home of about 80 square meters in the Yayuncun area, around the North Fourth Ring Road in Beijing. Prices of second hand homes in the area averaged 25,000 to 30,000 yuan per square meter.
He said housing prices in his target communities were around 20,000 yuan per square meter before the Spring Festival in February, and increased by 7,000 yuan per square meter during the recent two months. "Despite and because of the fast price growth, I will buy soon if I can find a proper one," he said.
For people who are struggling to buy an apartment in cities, a big market correction will make their dream come true. However, for those who have bought apartments at high prices in recent years and for those who invest for profit, a crash would destroy their dream.
Wang Xu works in Shanghai, the country's business hub, which also has recently seen skyrocketing housing prices. She owns two apartments, so the last thing she wants is a property market burst.
The 28 year-old woman spent about 800,000 yuan on a second home of 60 square meters in Shanghai last March, after she and her husband bought their 30-square-meter first home in 2005 with 290,000 yuan. The first now is more than 600,000 yuan and the second home is now worth more than 1.2 million yuan now.
"If the property market crashes, I will definitely crash at the same time. The money I have invested in the houses would disappear."
"The anticipation of a market collapse shows that people are getting more discontent and impatient as property prices go through the roof and government measures failed to control the prices rise," said Qin Rui, a senior analyst with the Beijing-based 5i5j Real Estate Service.
February home prices in 70 major cities in China climbed 10.7 percent from a year earlier, the fastest pace in almost two years, the National Bureau of Statistics reported. The rapid growth has ignited fears of an asset price bubble and prompted complaints.
Since the end of last year, the government has put in place a series of measures to curb speculative purchasing in an attempt to stabilize prices, including a harsher property sales tax, increased supply of affordable houses, restraining land purchases, and controlling bank credit.
Qin said the influential policies and seasonal factors in the first two months helped stabilize sales and prices for a while at the beginning of this year. However, people had still expected more effective measures to be unveiled from the annual session of the National People's Congress, China's parliament, in March, he said.
Since the parliamentary session, however, sales and prices have resumed the fast rate of growth in major cities.
In Beijing, previously owned home prices stood at 14,650 yuan per square meter at the end of March, 8.8 percent higher than that at the end of the previous month. Second hand home sales were expected to hit 27,000 in March in Beijing, the second largest only after December last year, according to the Centaline Property Agency. March 30 saw sales of 2,273 second hand homes, the record daily high in history.
Slim chance of Japan-style crash
Experts say that China is unlikely to repeat Japan's asset bubble crash since China currently is at a different development stage than Japan was in the 1980s.
The biggest difference was that China was still at a low stage of development and had a large potential for urbanization and property development, said Hao Daming, economist with the China Galaxy Securities.
The urbanization rate in Japan stood at 75 percent in the 1980s, while China would see its rate around 50 percent in 2015, he said.
He said the massive inflow of rural residents into cities would push up real demand for homes, different from Japan's market in 1980s which was fueled more by speculation after the yen's appreciation.
The Bank of Japan said in a report this week that China's current asset price gains were mainly driven by increasing real demand, with more of its population moving to urban areas. This was different from Japan's asset price bubble in the late 1980s, which was driven by speculation, the report said.
Cheng Enfu, a senior scholar at the Chinese Academy of Social Sciences, a government think tank, said another difference was that policies made by the Chinese government tended to be more timely and forceful than Japan's policies because policy-making in Japan was more affected by different interest groups.
He believed that the Chinese government would be able to squeeze out bubbles in the real estate market and achieve a soft landing by adopting a raft of measures.
Premier Wen Jiabao said last month that the government would resolutely curb the abrupt rise in property prices in some cities and satisfy people's basic need for housing.
However, experts held that the online predictions should be taken as a warning about the nation's bubbly property market.
"The bubble is big now," Cheng Enfu said, adding the government must be highly alert on potential risk as it would hurt the country's economy and result in social instability if left uncontrolled.
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