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China Housing Bubble Bursts: Q3 Land Sales Crater 50%
China may be doing everything in its power to divert attention from the simple fact that its housing bubble, the largest in the world in terms of both assets comprising it as well as divergence from fair value, has burst. But while there is no clear threshold of what constitutes a bursting bubble when it comes to housing, the latest data out of Soufun, China's largest real-estate website, which said that land sales have dropped a massive 22% to 1.7 trillion Yuan in 2014 so far, is likely as clear an indication as any that Beijing is about to panic.
And if that was not enough Bloomberg adds that land sales in 300 cites followed by Soufun fell almost 50% Y/Y to 415.9 billion yuan in 3Q, while residential land sales declined more than 50% to 265.3b yuan in 3Q.
So why, aside from the obvious, is this relevant? Because recall as we reported two weeks ago when looking at US household net worth, in the US it is all about (record) financial assets. So much so, in fact, that financial assets as a percentage of total household assets have never been higher at 70.3%, which also means that real estate as a percentage of total is as low as it has ever been.
Meanwhile, in China few households care as much about financial assets (the ones that do are largely a part of the Politburo or the ultra-rich oligrachy). Instead, the largest Chinese household asset is Real Estate, which at 74.7% of total household assets, is by far the most valuable asset that China's population has.
And once a few hundred million Chinese wake up and realize that the "wealth effect" portrayed by the blue bar above has been obliterated, the riots currently taking place in Hong Kong will be a gentle warm up for what the People's Liberation (sic) Army will be about to face.
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wow... now we´re talking
However, correct me if I´m wrong, but we are talking land sales aka new production?
In that case, well..everyone knew it had to slow down at some point.
That chart does not say that China is f**ked.
That charts days that we are both f**ked, just in different ways.
Kaboom!!!
It's all coming apart globally.
The Federal Reserve can have fun trying to save the world by printing away.
You haven't seen "printing" yet. Up to now they were just practicing.
Yes: printing and price controls
You missed capital controls.At least for individuals.
Gold bitchez.
Check
they can't/won't
QE ending (for now)
Ouch! That's gonna leave a global mark.
Not even a Chinese laundry will able to get it out.
I wonder if, given a dive in Chinese net wealth, this will have a negative result in all those Chinese buying homes in the US???
not if they paid for it with cash with little debt obligation, which seems to be the norm.
but, if there are no more Chinese coming to the west to buy more houses at ever higher prices, that would create potential flow-on effects.
Time for the China to extend subprime loans to all those displaced peasants. Don't the call them wiggers.
yeah, i really want to own yuan now
King Dollar
importing DEFLATION on tap
Make mine a BIflation, on tap.
Eh. Wake me up when I'm a multi-multi millionaire. Until then I'll just sit here being really rich.
Listen to Cracker: Turn on, Tune in, Wank off, Spooge out, With me
If houses are sold at $100 per piece, then they would sell all inventory within the day
issue is that, they want to........wait for it.....wait for it.........MAKE A PROFIT
Do you remember the word......PROFIT?
yes, and I also recognize CONDESCENDING when I see it.
all intentional
Sum Ting Wong
Sorry couldn't resist.
CHINA is the NEW JAPAN!!!!
It's all contained.
What is the Chinese of "Real estate never goes down"?
They shoot bankers, so what will they do with realtors ?
They shoot bankers, so what will they do with realtors ?
Hang them?
Doing business that has a negative impact on the exact and precisely forecasted GDP growth number is a crime against The People and will be punished.
Hung So Lo
The analysis is incomplete, which is bothersome. We're told only that land sales in China have dropped, and tossed a couple of numbers without context: bones without meat. "Land" does not necessarily translate to homes, especially in China, where every city has a multitude of stack-em-and-pack-em apartments. What do we know about supply in recent years? What about valuations for new and existing homes? Housing starts? Regional considerations? At least a house is something to keep you warm and dry. "Financial assets" are largely reducible to nothing.
You could argue that land sales are a leading indicator of new home sales, and confidence in the house building sector generally.
Doesn't mean the can won't be kicked down the road either.
Without knowing how Chinese developers run, its hard to judge.
I suspect they have no 'land banked' like western ones, in which case its
highly significant and will have a very quick effect.
Big western developers quite often have ten years of land banked,so could in theory
run for those ten years without buying more.
funny
communists are so smart
time for China to fire up the internment camps again
FEMA could help them with their latest designs.
Looks like this would be a great time for savy real estate infestors to get out there and start snapping up the bargins. Everyone knows that RE like to stawk market only goes one way and that is up!
We are going to need MOAR!
Did they run out of paper or ink or both? Mao papers are printed in every Chinese basement and converted to tangibles around the world. This is good news for people on the Westcoast. The flood of Chinese immigrants is finally coming to a screeching halt.
I didn't think people were allowed to buy land in china anyway. They lease from the gov for 70 years or something. Why buy there?
What does this article have to do with the price of tea in China?
(Sorry, down me for that stinky/corny joke.)
I think this is very significant....all of China's recent "wealth" is based on local governments selling "their" land to developers for ludicrous amounts. This created the illusion of wealth, and paid the bills (and all of the bribes).
If this really is the beginning of this ponzi falling apart it will tear the whole charade of super-rich Chinese tycoons apart. Don't get me wrong, the Chinese have worked very hard and made real money...what they don't realize is that all of the real wealth has been put up as collateral so the Chinese crooks can have fun in the global casino/fiat world run by global banking cartel. Vancouver, California, New York, Toronto etc etc is full of these crooks (at least their kids).
How will it all end!!
You don't think the PBOC would intentionally release phony numbers to help some of their cronies make a killing in some obscure derivatives in an undisclosed market?
The Fed would. (and did)
What about the ghost cities? Don't their ancestors want to live in a high rise anymore?
I was gonna short TAO, but didnt. Not a good trader.
But runaway gap down today, and still above the 200 day. Maybe for those more nimble than I.
The debate continues as to how stable china really is. Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system. This money encouraged expansion and construction with little regard as to real demand or need. Like a plane on autopilot China continued in the direction it had been on.
Now China finds itself in a credit trap. For years the people of China have had the habit of saving much of what they earn but the low interest rates paid at banks has not rewarded savers. With few investment options much of this money has drifted towards housing and driven housing prices sky high. The economic efficiency of credit is beginning to collapse in China and the unwinding of China’s giant credit spree could be very painful. More in the article below.
http://brucewilds.blogspot.com/2014/03/china-and-great-credit-trap.html
So these are the folks that have Russia's back.
Uh huh! Erm, yeah.
Everyone is desperate and posturing.