China - Housing 01 (May 08 - May 10)

[qxing78]

Watch the recent controversial chinese drama serial 蜗居, and you will know the impact of high prices of China properties on the young generation.

[winston]

With 2010 around the corner, the banks would have new quotas to lend out again. So mortgages should be easier to get in Jan, 2010.

[winston]

BTW, I have also visited various renovation centres in BJ.

I must say that they are all quite professional. They have a a lot of shops under one roof eg. designing, lighting, tiles, windows, washrooms, floorings etc.

Other centres may only specialize in a certain service eg. curtains, and you may a lot of shops selling just curtains at that place.

[winston]

Wen Calls for Action on Property Speculation as Prices Soar

Dec. 27 (Bloomberg) -- China’s Premier Wen Jiabao called for policies to curb property speculation, an indication the government is ready to tighten policies to prevent the economy from overheating.

Wen, speaking in an interview with the official Xinhua News Agency, said property prices have risen too quickly in some areas and that tax and interest rates are among tools that could be used to control speculation. His remarks were broadcast online today.

Wen said in the interview that China isn’t experiencing inflation and that consumer price increases will be kept in a “reasonable range.”

http://www.bloomberg.com/apps/news?pid= ... 0eqECwlq6w

[winston]

Will the China property bubble pop? By Jaime FlorCruz

* Beijing real estate prices have breached 50% over the past year, six times the country's 8.3% GDP growth
* Economist: China's real estate and stock markets are a "bubble" that will burst when inflation accelerates in 2011
* Others say rapid urbanization creates more room for growth in the property market


Beijing, China (CNN) -- When Crystal Zhang decided to buy a house last August, it seemed like a no-brainer.

For years, she had been spending a big chunk of her salary renting a studio apartment in Beijing, where she works as a mid-level executive in a multinational company. But her landlord kept hiking the rent, so she found a second-hand apartment and plunked 640,000 RMB (nearly US$100,000) as 52 percent down payment for a new home.

She now lives in a cozy, one-bedroom flat and sets aside 25 percent of her monthly salary to pay for mortgage. "I hope to pay all up in five years," says Zhang. "By then I can start making some other investments."

Zhang, 30 and single, is one of the fortunate ones. The upwardly mobile professional has ample disposable income--and a good sense of timing. In just five months since she bought her 85-square-meter apartment, it has already appreciated by 38 percent. "I'm glad I bought this one when I could still afford it, even though its price was already high," she said. "Now the price is ridiculously high."

In big cities like Beijing, the red-hot real estate market has seen prices raise more than 50 percent the past year -- six times the country's total economic growth rate. According to Shanghai Uwin, which tracks housing prices in China's richest city, average new apartment prices in the Pudong district soared by 57 percent to a record $4,061 per square meter, while overall prices in the city rose by 26 percent to $2,434.

Andy Xie, former Morgan Stanley chief economist for Asia, believes that China's real estate and stock markets are a "bubble" that will burst when inflation accelerates in 2011. "China's asset markets are a Ponzi scheme," Xie told Bloomberg. "Property is heading for one huge bust that will take a year and a half to unfold."

Even some real estate developers are getting anxious. Zhang Xin, CEO of SOHO China, agrees that the soaring prices are unsustainable, breaking ranks with other real estate tycoons. "When one gets fat, you need to cut weight" she told Forbes recently. "But this is like you haven't started losing weight yet and food is coming again."

Other analysts also see a bubble, at least in terms of affordability. "Even Chinese government statistics point to real affordability problems, with the income-to-price ratio in Beijing hovering at 1:22, when the IMF and the UN say the ideal figure is 1:3 or 1:4," said Ashley Howlett, head of China construction practice for Jones Day. "The fact is that the average people cannot afford to buy apartments in Beijing or other major cities."

Not all analysts share Xie's dire prognosis. Real estate bosses, and some economists, think there is still room for growth, assuming that China's rapid urbanization will continue.

Mei Jianping, professor of finance at the Cheung Kong Graduate School of Business in Beijing, believes that, "under the current low interest rates, the bubble is unlikely to burst, unless we have another crisis like last year or inflation suddenly surge.

"China is unique in the sense that there is nowhere for the middle class to put their money, low interest rates are low, equity markets are highly volatile, and corporate bond markets are small," Mei said. "So putting money in real estate is not all irrational."
The fact is that the average people cannot afford to buy apartments in Beijing.

Irrational or not, many factors have created this exuberance in China's property market. Massive bank lending over the past year, part of Beijing's stimulus package, has found its way into real estate speculation. Low bank interest rates have encouraged other forms of investment and make mortgages cheap-prompting a mindset that "we might as well buy an apartment than leave the money in the bank".

Fear of inflation also makes investment in real estate attractive. Limited investment options make buying a house a preferred choice. One poll conducted by Tencent website revealed that most of the 360,000 respondents agree that "happiness is closely related to owning a home."

If China is facing a bubble, will it end up like the U.S. did in 2008? Probably not, many experts say. Says Howlett: "The major difference between China and the US and the UK is the lack of 'sub-prime' lending and low gearing. There also remains a strong demand."

Mei Jianping agrees: "The bubbles are all inflated during low interest rate environment. The difference is that China is still growing and interest rates are expected to stay low for a while due to slow recovery."

Beijing cannot afford a collapse in the housing market as it is one of the pillars of China's economy. The property sector, analysts estimate, accounts for about a quarter of all fixed-asset investment in China and about 10% of national employment.

"The main way a bursting of the real estate bubble would hurt China is if it causes a sharp drop in real estate development, and thus a sharp drop in employment and the business activities of industries that feed the real estate sector," Howlett said.

Ashley thinks the government and the banks would probably continue to actively support the real estate sector to avoid such a scenario. "This is not an economy where price signals decide business decisions," he said.

New home-owner Crystal Zhang remains optimistic of her investment. "The bubble won't burst," she said, citing measures that Beijing introduced recently to prevent a U.S.-style crash in home prices. "Whenever the bubble is about to burst, there will be measures taken to stop it."

http://edition.cnn.com/2009/BUSINESS/12 ... index.html

[winston]

China To Tighten Credit Policy To Shackle Property Boom

(RTTNews) - China will restrict credit for the purchase of certain homes in an effort to counter speculation in the real estate market amid booming prices, Housing Minister Jiang Weixin said on Wednesday.

Jiang said that the restrictions will be aimed at buyers of more than one property and vowed to crack down on property hoarding by developers.

"The government will adopt tighter credit policies for the purchase of second homes to curb speculative investments," he said in a statement.

Beijing has already started to begun unwinding some of its stimulus measures aimed at the property market amidst growing fears that the Chinese property market is overheating and could well be heading towards a full-blown bubble.

http://www.rttnews.com/ArticleView.aspx?Id=1171856

[winston]

Not vested.

DJ MARKET TALK: Tax Worries To Weigh On China Developers - ICBCI

0956 [Dow Jones] At pre-open, China Resources Land (1109.HK) down 0.5% at HK$17.26, R&F (2777.HK) down 0.3% at HK$13.30, while China Overseas (0688.HK) +0.4% at HK$16.54, with sector expected to lag vs broader market on lingering concerns over property tax implementation this year.

"We believe the tax, if implemented, would be similar to the government rent and rates in Hong Kong," says ICBC International. Adds, by charging such tax, it will reduce property holding power of existing property owners, especially those owning above 4-5 housing units and thus curb property price increase.

Notes tax implementation talks indicate market worries about series of real estate policy changes; house says property sector will relatively underperform under such market sentiment.

Source: Dow jones Newswire

[winston]

Mobius Says China to Avoid Property Market ‘Crash’ (Update2) By Shiyin Chen

Jan. 8 (Bloomberg) -- Investor Mark Mobius said the bubble in China’s property market isn’t about to burst.

“The Chinese will act rationally and they’re not going to kill the market,” Mobius, who oversees $34 billion of developing-nation assets at Templeton Asset Management Ltd., said in an interview in Singapore. “There’s still a lot of savings in China. Prices are high but I don’t see a crash.”

Mobius said he plans to increase holdings in Chinese stocks by purchasing shares that benefit from consumer demand, including developers and raw-material suppliers. Shanghai’s index of property stocks has lost 28 percent in the year through Jan. 7 after reaching a one-year high in July. It rallied 1.1 percent today, halting four days of losses.

Any efforts to rein in lending probably won’t weigh on economic growth, and productivity will keep a lid on inflation, Mobius said in yesterday’s interview.

The central bank, which has kept its benchmark one-year lending rate at a five-year low of 5.31 percent after five reductions in the last four months of 2008, allowed a record 9.21 trillion yuan ($1.4 trillion) of new bank loans in the first 11 months of 2009.

Stock investors remain “complacent” on inflation and tightening risks, BNP Paribas said in a report dated Jan. 7. The brokerage said the central bank is likely to implement “a series of hikes” in 3-month and 1-year bill auction yields to guide market expectations of a monetary policy shift and may raise the bank reserve ratio in the first quarter.

“We actually have a long-term bullish view on China but in the short term, we’re actually less bullish,” Joseph Zeng, head of Greenwoods Asset Management Ltd.’s Hong Kong office, said in a Bloomberg Television interview today. “The market is going to be like a ‘W’ shape. This means more volatility, but it’s still going to move up.”

The government imposed a sales tax last month on homes sold within five years of their purchase and took other steps to curb property price increases.

http://www.bloomberg.com/apps/news?pid= ... unPU9D8qzk

[winston]

Not vested.

DJ MARKET TALK:China Ppty Stks Lag; Sales To Fall 20% 2010-Guotai

1152 [Dow Jones] HK-listed China property stocks mostly lag vs HSI's 1.3% gain, as sentiment dampened after news yesterday that China State Council says it will step up efforts to keep hot money from abroad out of its property market and restated down-payment ratio on 2nd home no less than 40%.

"This policy is better than market expectations (50% down-payment ratio)," says Guotai Junan. But adds, due to abnormally high sold area in 2009 and high property selling price, brokerage keeps its forecast in 2010 for most China developers: 20% on-year contracted sold area decrease (in terms of residential property sold volume).

Keeps sector at Underperform, tipping China developers will face decreasing demand and policy contraction in 2010.

China Overseas (0688.HK) +0.7% at HK$16.76, China Resources Land (1109.HK) down 0.9% at HK$17.10, Agile (3383.HK) down 1.5% at HK$11.64, while R&F (2777.HK) down 0.9% at HK$13.32.

Source: Dow Jones Newswire

[winston]

Not vested.

DJ MARKET TALK: Mainland Developers Down; Buy Strong Ones - DBS

1109 [Dow Jones] Another weak day for mainland property stocks, though most big names falling more or less in line with HSI's 0.8% decline, as investors continue to fret over sector tightening measures.

DBS Vickers advises investors to buy strong players with track record, commercial plays on share price weakness; says strong players tend to outperform weaker players, gain more market share when market is uncertain.

House favors China Overseas Land (0688.HK), China Resources Land (1109 HK). Alternatively, suggests investors buy commercial plays, such as Franshion Property (0817.HK), as they are less affected by policy risk.

COL down 1.3% at HK$14.12, CRL down 0.8% at HK$16.74

Source: Dow Jones Newswire