Chinese netizens report: 51.23% of sold housing in Shanghai is vacant - Shanghaiist

Chinese netizens report: 51.23% of sold housing in Shanghai is vacant - Shanghaiist.

Der Spiegel forsees bursting Chinese Housing Bubble

Der Spiegel predicts a new challenge for the global economy in 2012, when Hu Jintao and Wen Jiabao step down from the government. The magazine predicts that will be the moment China’s real estate bubble is likely to burst. We’ve heard the argument many times before, but Spiegel focusses on the first ones most likely to suffer from dropping housingprices: local governments in China’s cities:

China, which long seemed immune to the global crunch, now faces the threat of a homemade real estate crisis. This could spell trouble for many local governments, which in some cases have financed almost a third of their major infrastructure projects, like airports and train stations, by selling agricultural land to real estate sharks.

The article quotes Cao Jinhai from the Chinese Academy of Social Sciences in Beijing, who scetches the worst case scenario, when local governments run out of money, because they lose their single most important source of income: land sales.

In the worst case, Cao predicts, there could be a large-scale run on the banks. “Of the 4 trillion yuan in the Chinese economic stimulus package, 3 trillion are in fact coming from local governments — and they borrowed the money from the banks.”

The Go West Project plans to focus on the overproduction of real estate in China during our trip to Yinchuan in October this year.

China’s Property: Bubble, Bubble, Toil and Trouble - TIME

The news and reports about China’s real estate market are not over yet. Time Magazine has an interesting article Bill  about this market, and it tries to answer if China is facing a(n exploding) real estate bubble. A believer in the fact that there is a real estate bubble is Andy Xie:

As economist Xie points out, residential prices in China relative to per capita income are far and away the highest in the world. The housing price-to-income ratio in urban China is over 20, which means it takes the average citizen’s total wages for 20 years to buy an average dwelling. (By comparison, the highest housing affordability ratio for a U.S. city — Honolulu — is 8.2.)

Nor, among home buyers in China, is there a significant amount of debt financing. According to Patrick Chovanec, a professor at Beijing’s Tsinghua University who studies the Chinese real estate sector, only about 50% of residential purchases are made using mortgages. The other half are paid for in full at the time of acquisition. (In the U.S., by contrast, over 90% of residential housing transactions are financed with mortgages.)

For most savers, that leaves real estate or the stock market — and if an apartment is the equivalent of a bar of gold, the stock market is the equivalent of a casino. Generally speaking, the Chinese love to gamble, but they love their bars of gold more.

China’s housing investment is preposterously large - Shanghaiist

Cary Hooper on Shanghaiist writes:

The more we hear about China’s housing market, the more outrageous it seems. China’s real estate investment grew by 75% last year: in total, 4.4 trillion yuan was spent last year, a large part of which was fueled by 9.5 trillion in new loans. If you need a physical gauge for just how much that is, chew on this: over the course of the year, China sold 937 million square meters of space, nearly twice as much as in 2008. In order to curb housing market mania, Wen Jiabao announced new curbs on lending to manage credit growth, but with the enormous contribution that housing makes to the national GDP, we’d be surprised if anything but a crash will stop people from buying new houses.

Also check the Shanghai Daily: property sales in China surge 75%