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Shanghai New Home Prices Tumble 41% In Past Week
While the number is likely influenced by the Chinese Lunar New Year, property consultant Shanghai UWin Real Estate Information Services Co. released an update on the Chinese new home sales market which is, to say the least troubling. Specifically, according to UWin, Shanghai new home prices fell 40.96% in the week ended January 29, compared to the previous week, to 16,144 yuan/square meter. If correct, it means that local homeowner violence is about to come back with a vengeance, as happened back in October when property developer office were stormed by angry mobs of home purchasers who saw an implosion in the indicated values of their purchases. Furthermore, not only has the market stalled, but it appears to be frozen, with just 4,400 square meters of new transactions closing, or an 89.21% drop on the week. And while the holiday has an impact, the volume is 36% of the 7 year average for Chinese holidays, so there is more in play here than just a seasonal grind. So just like the Baltic Dry where everyone is expecting a surge "any minute now" that the Chinese new year is over, nervous China bulls will have this new vertical to keep track of and make sure that it is merely a blip, as the alternative is a full blown Chinese housing bubble collapse.
More specifics from Bloomberg:
- New home transactions by area plunged 89% W/w in Jan. 23-Jan. 29 to 4,400 sq/m, Uwin says in e-mailed statement.
- Sales during Chinese New Year holiday decline to lowest level since 2006 for same period; volume 36% of 7-yr avg. for CNY holiday
- Avg. new home price down 41% W/w
- New home supplies plunged 87% W/w
- Property developers may have to continue price cuts for cashflow to survive, Uwin analyst Zhijian Huang says
- China may remove or relax home purchase restrictions during June-Oct period: Huang
- Policy turnaround may boost sales before home prices rebound moderately: Huang
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Do they use NAR too
Fuck my old boots!
I guess Armada Markets guys were right after all.
It was a good call. I don't think anyone saw that one coming... much...
This is my shocked face......yeah.....I'm working on it.
and then I thought, hmmm, in terms of Shanghai property, my gold just doubled in value.
Yip yah. Just need to make sure that I'm not being too greedy, wouldn't want to miss the bottom now, before I jump in...
Fair value and all that...
Hopefully it spills over into Australia and Canada this time as has been long overdue.
Mass suicide is the future.
They might want to apply some 'smoothing' there...
and some vaseline, for those awfully nice Chinese property speculators who should have bought gold...
Well to be fair this does explain the gold sales up +50% during the same week, money had to come from somewhere...
The China collapse has begun
The property trade is now done
Despite all the cheers
It's time for the tears
But blowing that bubble was fun!
You can add the UK to the list. My kids may then be able to afford somewhere to live without putting themselves into enslavement for the rest of their lives.
No damn Country is an island anymore. One DAY bloomberg et al says it isn't and the next day they say it is. Well it is everyday. All those crazies who marched, protested, screamed about GLOBAL TRADE was a bad thing were right...there is no way to stop contagion of anything anymore.
I heard on NPR a Chinese lady screaming ( no you don't want to hear a Chinese woman screaming unless the volume is way low) about her loosing 60,000 usd in one week on a condo bought directly from the builder in Shanghai. And there were a many more standing behind her screaming too.
You mean like, real estate can go down? WHY DIDNT YOU TELL ME THIS BEFORE!
"Suzy Wong" robo signer for the banks on most recent Chinese mortgages.
James Chanos and Hugh Hendry had this one nailed.
Speaking of the global economy, spent sometime asking the pacific North West what NAFTA did to there economies, Hawaii Sugar cane farmer's as well.
NAFTA cut there Jungler vien's while the country just watched.
I've long anticipated a housing crash in Australia as a direct result from the Chinese and Indian economic downfall. I believe it will take it's last gasp when investment in their RE market from the well to do EM's finds a place to park their money in "stable" hard assets. Australian and West coast Canadian RE will be destroyed from within as the dash to dump trash ensues. The panic has already begun and 2012 will be 2007 US style. New money Bogans beware. The age of the Chapel St. wog dating hot skippy bitchez is also over.
Here's a satirical, if not accurate view, of China-Australia relations.
http://www.nakedcapitalism.com/2012/01/satyajit-das-top-secret-the-chine...’s-briefing-paper-on-australias-economy-part-i.html
...and the pin has been pulled
http://www.abc.net.au/news/2012-01-30/fitch-threatens-to-downgrade-aussi...
This needs to happen here.
You mean Angola?
LOL! I trhink he means hell USSRA - run by the Democreeps muslim.
How is it possible for new construction home prices to fall 40% in one week? Did the builders suddenly decide they were asking 40% too much? Did somebody find an accounting error and say - gosh, we're charging way too much, we've got to let everyone know those prices are wrong? Did somebody read the ads carefully and notice that there was a typo - hey, it says here that our apartments cost $1 million instead of the $600,000 we decided on in last week's sales meeting! WTF happened? In one week?
americanspirit
"How is it possible for new construction home prices to fall 40% in one week?"
Cashback and rebates.
Tough to typo 41. It's called a housing bubble for a reason. Bubbles dont often pop slowly or gently. And the bigger the central plan the harder it will fall.
We are the debt morons of history but China is the Central Planners wet dream.
After effect of cankicking.
Why do people want to buy something more the higher the price goes? I will never understand.
Add to the list people who were stampeding into equities last week. And I get to read these stupid articles on Marketwatch about how cheap stocks are. Well clearly they are 20% more expensive than 3 months ago or 100% more expensive than 3 years ago. But they are going up so buy buy buy. Til the day after you buy them they stop going up that is...
It's called the GREATER FOOL THEORY. Boy does it work until it doesn't.
It's cool, because they don't use their homes as ATMs.
any minute now!....lol....
Biggest housing collapse since the Haiti earthquake ! Monedas 2012 Visionary Staff Hoarder (Ed note: Monedas is not an employee of ZH !)
Something really wierd happened last week. I was at a conference in Dallas last week and a buddy that I had a fleeting conversation with about our coming collapse asked ME about how my silver was doing. "Euro...Debt...Mafia...Italy...Bank...US as Bad...Illinois...California...16:1...Industrial use..."
Long story short his closing remark: "Yeah, I'm starting to get really worried too."
He's headed in the right direction so I didnt want to overload with the problems in China too but they are great.
JPM Hater001
"Long story short his closing remark: "Yeah, I'm starting to get really worried too.""
Fuck him! report him to Homeland, see if you can get a reward. Maybe a "Get out of FEMA camp free" card.
Not gonna get the FEMA card. There's a whole wing for me. I represent the libertarian on the street everyway everyday.
Three points:
1. Counting real estate closings during the past two weeks in China is like counting closings on Christmas Day and saying they are indicative. Everything is closed except the noodle stand.
2. We just entered the year of the Dragon, the most auspicious year in the Chinese calendar. Millions of Chinese are timing offspring to be delivered this year. No Chinese person is going to close 1 week before the year of the Dragon. This is a big deal and a 7 year average does not factor this in.
3. Pre- New Years holiday sales in HK were, flat.
It may sound ridiculous, but Feng Shui plays a very big part in Chinese real estate decision making.
williambanzai7
Uhhmmm, point four. Drunk from New year celebrations.
Two most dangerous words in the Chinese language? "Gen Bei" = 'Drink Up' Combine the phrase with that 100 octane rice wine they drink and WTF who wants to do anything but take a nap.
Good comment. Polite and correct. If the US held the Super Bowl on Thanksgiving, and followed it with the American Idol finale, an antique store in Keokuk, Iowa selling Bauhaus furniture would do more business on that day than all of China during Lunar New Year.
That being said, an ill wind doth blow through the Middle Kingdom right now.
If so, why wouldn't the sellers just wait a week or two to close? Sincere question.
WB7 - I agree with you. I got some pictures from Chinese friends made during this holiday and everyone seems to be super happy and more than little bit drunk. I would remove this week from any statistical analysis.
However, we will see how the next month unfolds. Something tells me that our Chinese friends may be for a rude awakening. I am in the camp that the real estate party in China is over.
Honk Kong is different case. I fail to understand what supports prices there.
What supports prices in hk? Ermmm cash coming from one small country, name starts with CH and ends with A.
Makes not a huge sense. 40% cheaper price is still a very good deal dragon or no dragon, call it an early dragon. They didn't seem to delay gold purchases...
You just wait when hk gets hit, it may have to cede the crown of the most expensive real estate on the planet
Meanwhile, back in the US, Freddie MACdaddy is betting against homeowners being able to refinance at the current low rates. http://www.propublica.org/article/freddy-mac-mortgage-eisinger-arnold
“We were actually shocked they did this,” says Scott Simon, who as the head of the giant bond fund PIMCO’s mortgage-backed securities team is one of the world’s biggest mortgage bond traders. “It seemed so out of line with their mission.”
The trades “put them squarely against the homeowner,” he says.
NICE!
White, middle class Jews aren't on Obama´s high priority list for mortgage relief !
95% of them helped put the muslim in office.
bubble, bubble, toil and trouble...
williambanzai7
Dude when will you be doing FEMA camp tee's?
Like, I turned me neighbor in and all I got was this stupid FEMA camp shirt. Or, No flutes in FEMA camp for that pussy.
US has a shitload of Camp memes, everything from Friday the 13th to Meatballs.
Big trouble in Little China - Where's Jack Burton when you need him?
Soon we will see the "brilliance " of central planning as the Chinese find out it probably wasn't a good idea to build empty cities.
No way man, like... they're way easier to maintain and upkeep without people in them... no deterioration whatsoever.
Banzai summed it up nicely. Next.
"Shanghai new home prices fell 40.96% in the week ended January 29, compared to the previous week" - surely not even you guys are bearish enough to believe this!
Pop!
We can only pray that both the PM numbers and the housing numbers are due to the holiday. I think that is fairly reasonable as there is no way to "seasonally adjust" a one week period. Even comparing to previous New Years Holidays would be an uneven comparison as for example this is the year of the dragon. Bottom line: the larger your sampling period the more likely your data is to capture the actual situation. One week of data during an exceptional period may not be representative of the larger trends. In this case of a 40% WOW change, I think it is safe to say it cannot be.
He's got tan trousers and a plaid shirt...NO HE'S NOT RETARDED!
HEY FRED...THERE'S YOUR CHINA-MAN....
Anecdote from a neighbor: the country where I am holds jade auctions every few months. In past years (before 2007) they would sell a few million dollars per auction. In 2009 this jumped to above $1 billion per auction (at a time when this nation's GDP was only about $15 billion). In 2011, four auctions had sales of more than $8 billion of jade, except.......buyers (now limited to only mainland Chinese) pay 10% down, then go home to arrange financing in the shadow banking system for the rest. If they get the financing, they send it here and their purchase is shipped to them.
In the last auction of 2011, winning bids totaled $2.8 billion. When the buyers went home and sniffed out the market for jade, not to mention financing, they got spooked. Almost all reneged and ate the 10% downpayment, that being the lesser evil. Jade prices here fell 75% within days.
China is hurting.
Interesting.
Like I keep saying...."Extraordinary delusions and the madness of crowds..." Chas MacKay.
Yep,I threw down the money for this 175 year old book....on my phone via nook no less....I am throwing out an estimate, 175...might be more....I think 1830s maybe....ANYWAY...
NOTHING HAS CHANGED.....nothing! Johnny Law is alive and kicking!
MUST READ....GOOD SHIT....TRULY....The nook app's on your phone are free I think and just buy the book, it's 10 bucks maybe.....TIMELESS/PRICELESS......
There are always the people like the old man in the bar in The Perfect Storm where they know whats up....but are shunned because it's not fun!
Read it....you wont regret it. Tell me you dont have time in the day where you are surfing on your phone, instead, just read it!
word!
Read the book 174 years ago. That was the first time. The next book any trader reads is Jesse Livermore's book. Then you make a pilgrimage to the bathroom in the bar of the Sherry-Netherland Hotel. Only after doing that is one ready to put money at risk.
Avg. new home price down 41% W/w
Not annualised but week-on-week ?
F**KING HOLY MOTHER OF GOD !!
Thankfully we have 0bama to fix our mess......
Not statiscally significant:
NEW home sales in Shanghai during the week-long Spring Festival holiday fell to the lowest in seven years. Only 1,700 square meters of new homes, excluding government-funded affordable housing, were sold across the city, a report said today.
ZH: Don't spread bullshit analysis
Given the proximity of Dragon year (noted below by WB7) probably only the most distressed sellers continued sales during spring festival...
Not enough transactions to be statistically significant. One guy selling a place below market value to his mom could have produced the entire decline.
"One guy selling a place below market value to his mom could have produced the entire decline."
Um, do I need to remind you that America's population is a rounding error? And this was based against previous weeks in history as well. The point is any way to look at it there is a slow down. How big?
I think 41% may be an understatement.
Title should have been "POP THE MAGIC DRAGON".
So, Asset depreciation coupled with Monetary inflation = Stagflation. The Chinese authority has little choice to stave off further economic instability. It must allow the market to burn off excesses which will result in either;
This is classic "Shock Doctrine" Freedman Chicago School economics as described by Naomi Klein with Chile, Argentina, Iraq and the former Soviet Union. The Shock was Tiananmen Square which has all the hallmarks of a western instigated coup attempt or agitation to say the least. All failed coup attempts result in the host authority in power complying with the aggressors economic mandates or regime change. Any resistance is met with military aggression. The further we proceed through the China Miracle, the more I'm led to believe that the end game is for outright war between the West and China.
Same thing needs to happen in America.
It's disgusting that we care that a real estate bubble, well advertised for years now, may have popped. In a communist nation no less. Fuck um.
These are people, asshole. FU.
16,000 yuan / square meter works out to $250/sq ft. if my math is right.
So a 1,000 sq ft condo (2 bedroom) would be around $250,000. That is quite a bit more expensive than most suburban homes in the US, but not as expensive as nice condos NY or San Fran.
Given that Shanghai is in a third world country and has third world labor (construction) costs, this still seems a bit high. $200/sq ft seems more likely the bottom. I think after 20 years of real estate deflation in Japan, condo prices are roughly in line with $250/sq ft. So the Chinese prices aren't a bargain, they have just come down to reality - or maybe even a touch above reality.
Yes, from what Chinese people tell me, real estate prices are approximately the same as in US. Yet, their median income is supposed to be < 1/10th US and they have to pay cash without a mortgage. Cars are no cheaper than US and they buy more. Something doesn't add up. Must have massive unreported income.
16000/6.33=2530 CNY to USD
1 m^2=10.8 ft^2 (if they count livable space the same way)
Therefore, 2530/10.8= about $250/sq. ft. Good job, but,
Chanos once described the condos in China as instruments of investment rather than dwellings. In other words, they are unlivable. I have also heard that many condos in Miami at the height of the bubble were the same. So is a space still considered a home when you enter in from a balcony, exit through a shoot, cook in a bathtub, stairs lead up to brick walls, shit at 45 degrees? Just kiddin.
Literally unliveable, new construction usually doesn't come with the plasterboarding, plumbing or electrical completed. Buyer has to do that.