Shanghai property values plunge, recent buyers protest

By Edward Harrison On Oct 27, 2011

The Chinese property market has come off the boil according to this video from NTD Television (hat tip Global Macro Monitor). The issues are reminiscent of the US subprime crisis in which developers, under the gun from a falling market, were forced to slash prices to sell new apartments. Recent buyers are seeing their investments implode overnight.

Edward Harrison 7783 posts 575 comments

Edward Harrison is a senior Editor at Bloomberg. He is also the founder of Credit Writedowns newsletter, a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

The Creeping Eurozone Credit Crunch

Quantitative Easing!!!

3 Comments

David Lazarus says 13 years ago

The BBC did some interesting investigation into the Chinese property market and it might not be as bad as some expect. In China with the large imbalance between the numbers of men and women, the average Chinese bachelor will need to buy a property to have any chance of getting married. This will create a floor for the market that conventional analysts have missed altogether. Plus in China many homes are bought with very large deposits and so the banks are insulated from a loss. Though If the market is perceived to be over values it could deter buyers till prices get to a level that is deem sensible.
1. ozajh says 13 years ago
  
  If my understanding is correct (from what I have read, I do not pretend to any expertise in the Chinese property market) the banks may as you say be insulated from MORTGAGE losses, but may be very exposed to losses from loans to developers.
  
  This aggressive price cutting may in fact be being forced upon the developers by their lenders.
  1. David Lazarus says 13 years ago
    
    Yes from what I know as well I think you might be right. In China, property is a store of value by end users not a leveraged investment. I do think that the developers are the real risks.

Comments are closed.