Over in the great dog-eating nation of China, where daycare entails bringing your child to work to be chained to a wall, there are curbs on how many homes a person could own. Since the housing market is so fucking awesome, with prices up a mere 30% over the past 9 months, greedy gamblers are staging fake divorces in order to buy MOAR — like animals.
After all, what could go wrong?
source:bloomberg
Earlier this year, Mr. and Mrs. Cai, a couple from Shanghai, decided to end their marriage. The rationale wasn’t irreconcilable differences; rather, it was a property market bubble. The pair, who operate a clothing shop, wanted to buy an apartment for 3.6 million yuan ($532,583), adding to three places they already own. But the local government had begun, among other bubble-fighting measures, to limit purchases by existing property holders. So in February, the couple divorced.“Why would we worry about divorce? We’ve been married for so long,” said Cai, the husband, who requested that the couple’s full names not be used to avoid potential legal trouble. “If we don’t buy this apartment, we’ll miss the chance to get rich.”
INDEUD!
On the whole, the real estate market “apparently cooled” in October following targeted measures rolled out in first-tier and some second-tier cities, China’s National Bureau of Statistics said in a statement. Local governments in at least 21 cities have been introducing property curbs, such as requiring larger down-payments and limiting purchases of multiple dwellings in a bid to cool prices.
In the first three quarters of 2016, according to data compiled by Bloomberg, average prices for new homes rose 30 percent in tier-one cities such as Shanghai, and 13 percent in smaller, tier-two cities.
A mere 30% in 9 months. NEW RECORD!!!
In many cities, the price per square meter for undeveloped land has risen higher than for existing apartments on a comparable plot next door, a situation the Chinese describe as “flour more expensive than bread.”
That’s sounds normal.
“Usually the market moves in tandem,” said Patrick Wong, an analyst with Bloomberg Intelligence in Hong Kong. “It’s quite dramatic to see tier-one cities need tightening and lower-tier cities need relaxation.”
There’s some risk that such measures will succeed too well. In a Sept. 28 report by Deutsche Bank AG, economists Zhiwei Zhang and Li Zeng estimated that a 10 percent decline in housing prices nationwide would lead to 243 billion yuan in losses for developers. Consumer spending could fall, too, since people have taken on more debt to buy property. Mortgages accounted for 23 percent of new loans in 2014, compared with 35 percent in the first half of 2016 and 71 percent in July and August.
“The potential macro risk is alarming,” Zhang and Zeng wrote.
“The only thing I know is that buying property won’t turn out to be a loss,” said Cai, citing two decades of rising prices as proof. “From several thousand yuan a square meter to more than 100,000 yuan. Did it ever fall? Nope.”
Will it ever fall? Nope. Taking into consideration the level of debt and NPLs haranguing China, I’d say this is the single most important macro trend to watch. Speaking of which, my FIST OF DEATH short sales have been released in Exodus.
Comments »
