Many of the city's real estate market in
China, the recent blowout prices, financial panic-buying scandals. Who claims
the Pudong New District, Shanghai, in fact, is 70 kilometers from the Lujiazui,
but more than 400 more homes get snapped in two minutes of trading. In order to
circumvent the restriction policy, people rushed to the divorce Center filed
for divorce, was the crowd's divorce Centre had to close the field service,
divorce required daily quotas row days before they are processed.
As an economist, I mentioned earlier on,
Indian summer, but did not foresee this at all round soaring House prices.
Where am I wrong? Wrong will analyze real estate residential property,
inventory, supply of land for housing, income growth, population structure. In
fact, China's property market at the moment, those factors are not important.
Today, China's real estate, starting point should be the analysis of the
financial property, non-residential properties.
Lack internal impetus to China's economic
growth, the Government vigorously implement the monetary expansion, the money
supply in the first quarter of this year like 2010 "4 trillion
stimulus" battle. But due to the economic downturn, overcapacity,
increased risk, and better companies are reluctant to borrow, banks are
reluctant to lend. The real economy cannot absorb the sudden rise in liquidity
and funds only stuck in financial economy, the stock market has less free, we
speculated in real estate. When house prices rising, many occasions can be seen
clearly on local governments and developers in land auctions, upping the
induction of capital market. Once the upside momentum, housing and land
interaction stimulates real estate become self formation, promotion of a bull
market. Low asset returns is the pain of the residents, under the soaring, bank
deposits were quickly transformed into buying purchasing power. Banks face high
quality projects and fewer problems, the Government has urged lending,
mortgages become their main means of handing in recent months, almost all new
bank lending in the mortgage field. Financial innovation and create new ways of
borrowing, lack buyers driving up borrowing rates on the train.
Create another reason for the surge in
housing and land, is the cost of capital falls. Real estate adjusting of the
Chinese Government, has always focused on developer stuck the funding source
and the cost of capital, the developer too much because the accident capital
chain rupture. This administration after several efforts, funding costs have
declined dramatically, has also become more varied, facilitation of financing
channels. But it came too late for business entities, beneficiaries are the
developers and local governments. When funds from the developer the restriction
imposed on the head off, the developers "financial freedom", and the
game becomes exciting real estate market, buyer-seller's power scales
completely tilted. Meanwhile, enterprise financial position could not be found
in the real economy, also flows--hype than operating industrial real estate
market is easier to make money.
Of real estate finance, is the reality of
today's real estate market. Real estate asset finance, buyers of funds
financial, developer funding financial and prices according to their financial
properties running, human weaknesses to amplify it, panic created new buying.
Today's real estate market, chaos, and hype
over leverage processes and impetuous. Wrong, not buyers of madness, in
liquidity maker madness.
I cannot see to the overall contraction of
Beijing real estate policy reasons. First of all, China's economic improvement,
self growth, lack of motivation, stimulus effects a decline as a pillar
industry of real estate is critical to economic stability. Secondly, the local
government faces unprecedented challenges, many counties even have difficulties
paying civil servants ' salaries, land finance shut the door no one dared. In
addition, real estate to inventory, is the established policy of the Central
Government, dismantling financial risks is required, all speculation money into
third-tier cities, such as free housing inventory. I see it, Beijing will limit
prices from overheating by local governments, but should be able to direct
funding to three or four cities to inventory, rather than end the bull market.
So, there is no bubble in Chinese real
estate? See data: in 1990, the Japan real estate value equivalent to the GDP of
the country 200%; in 2006, the United States real estate value 170% of the
national GDP; today, China's total real estate 250% of the national GDP. Today
in three cities of Beijing, Shanghai, Shenzhen real estate value is equivalent
to the United States national value of real estate as a whole 70%.
In the past 100 years, the world housing
bubble there about 40 or so. Each bubble is a national of that State said their
prices rise and the other bubble, has its own situation. When the bubble burst,
only to find foam has far greater than the similarities, the foam is foam. I
don't know when the bubble burst, just know that when the credit cycle turns
potential when real estate cycles tend to the turnaround. China's credit over
GDP ratio is expected this year at 250%, exclusive pieces in the world, far more
than the second place. The economic cycle, is the basic concept in economics,
and the ups and downs of the economic cycle depends on the credit cycle. Or
policy, or policy mistakes, or the reversal of capital flows, or dramatic
increase in banks ' bad debts, triggered a credit squeeze and eventually lead
to adjustments in the housing market. The history of modern capitalism,
basically in this credit cycle, cycle, lid not exception. House prices up even
more crazy, more adjustment pains. God wishes to destroy, shilling mad.
China's economy is the weakest link,
developers and local governments; the strong link, high household savings. When
the crisis in the property market, most people suddenly found a ring and the
weakest link to be linked together. One day, historians will say that it was
the Government's fault, thousands don't dont want a big mistake. Better late
than never, especially late.
Original this week.
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