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Old 04-24-2014, 02:30 AM
 
1,011 posts, read 628,280 times
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Narrow minded Americans who do not know the outside world.

Each year, Shanghai added half a million new residents. How many can NY add?
Shanghai is one of the most fast growing cities in the world. with last 10 years, it has added more than 400 km subway network. How much has NYC added to it pathetic subway? Maybe 0?

I know Manhattan is expensive. Why? those bankers make a obscene amount of money by screwing up the average guys.

Quote:
Originally Posted by Tdiva View Post
Lol... nobody wants to live in Shanghai besides the Chinese or reluctant expats. It's nice that you confirm that even the Chinese want a piece of Manhattan.
You seem to contradict yourself in many ways.
Now tell me, how is a city with housing prices similar to Manhattan, yet people making far less, sustainable?
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Old 04-24-2014, 02:30 AM
 
3,123 posts, read 2,702,092 times
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Quote:
Originally Posted by Tdiva View Post
Ok.
Thanks for the extra info.
However, the economist article and the source of your graph you linked says at the bottom that:
"Fears grow of a bubble in China, led by overdevelopment and low occupancy. According to The Economistís index, based on official figures from 70 Chinese cities, prices increased by 8.7% in the year to November 2013."

Obviously they read different information out of it than you do -- prices increased almost 9% in 2013, definitely more than 3.5% average that you claim.
Again, you are not able to read the chart right. The price increase from Q1 2008 to Nov 2013 was 23%, which is 3.5% a year. The price increase in 2013 was 8.7%. Just like in America, the price increase in 2013 was 13.6%, but the prices today are still lower than prices Q1 2008. 13.6% in America is way worse than 8.7% in China.

In 2013 property prices increased faster than 2012, now in 2014 the prices are slowing down again.

Quote:
One of the discussions here was that there is overdevelopment (ghost towns) of overpriced property that are empty, bought up by people, exactly as you say, rich Chinese people as investments, assuming that prices will go up.
How is this real demand??
Except you cannot even do that now, due to restrictions on how many apartments you are allowed to buy. What is actually happening is people are buying a second apartments they are planning to move into. But they are still waiting for public services to become adequate. That ghost town will no longer be a ghost town in 5 years.

Quote:
Nobody is building the low income housing, since they will not sell for as much although developers know that there is real demand for those. Why would you if the rich will buy the pricier ones blindly.
There are low income housing built. I have driven past several very basic apartments that have recently been built in the suburbs. Also, all the apartments in small cities are for low income people.

The idea that some rich people buy up all the apartments as investment is based on a myth, because they cannot even do that, because second apartments lead to high taxes. As pointed out, people are waiting for public services become adequate. My wife's family bought a house in the suburbs which right now right now is a ghost town. They are waiting for the new subway to be built before they move in. It is not like America where you can afford to drive everywhere. Also, the place needs to be decorated. In China the apartment comes as a concrete shell.
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Old 04-24-2014, 02:33 AM
 
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We are talking about housing bubble in China for at least 10 years. but after 10 years, the price actually quartripled in many major cities. Keep on predicting there is a bubble. you will see another doubling of price within next 5 years


Quote:
Originally Posted by Tdiva View Post
Ok.
Thanks for the extra info.
However, the economist article and the source of your graph you linked says at the bottom that:
"Fears grow of a bubble in China, led by overdevelopment and low occupancy. According to The Economistís index, based on official figures from 70 Chinese cities, prices increased by 8.7% in the year to November 2013."

Obviously they read different information out of it than you do -- prices increased almost 9% in 2013, definitely more than 3.5% average that you claim.

One of the discussions here was that there is overdevelopment (ghost towns) of overpriced property that are empty, bought up by people, exactly as you say, rich Chinese people as investments, assuming that prices will go up.
How is this real demand??

Nobody is building the low income housing, since they will not sell for as much although developers know that there is real demand for those. Why would you if the rich will buy the pricier ones blindly.

I do not see your "real demand=no bubble" anywhere in this picture.
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Old 04-24-2014, 02:39 AM
 
1,011 posts, read 628,280 times
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I think most of the discussion here misses one important point: China is not a homogenious country. It is a huge one, with 1.3 billion people and with cities with different stages of development. The cities are categorised into 1st tier (like BJ or SH), 2nd tier, and 3rd 4th tiers. Most ghost towns are built in the 3rd or 4th tiers cities. The prices are tumbling already. That is normal. But the price in 1st and 2nd has a lot upward pressure, especially the 1st tier. It is the same in US. You have price tumbling in Arizona, but in SF or NYC, the price is going up. All real estate is local. There is no point generalising China as one market.
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Old 04-24-2014, 02:49 AM
 
1,011 posts, read 628,280 times
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In the past 10 years, China's read GDP is going up by 8% a year. Inflation is about 4% a year. Average housing price is going up 10% a year, so it is lower than the growth of nominal GDP.

In a typical coastal city, like Wuxi (one of the best developed area in Yangzi Delta), the price for a 100 square metre apartment in a good location is about 1 million RMB or 160k USD. It is actually very cheap for the locals, who make about 30k USD per household. Remember unlike in US, the savings rate is very high. So the household there can save 50% of their 30k USD annual income.

Quote:
Originally Posted by jm31828 View Post
Yeah, same numbers I have seen for places like Guangzhou, as well- even though new condos are going for hundreds of thousands of $$. That is not sustainable- you can't have housing prices as high as they are in many American cities (if not even higher) but yet have income many times lower- that means only the top sliver of society being able to afford everything that is being built. And sure the middle class is getting richer, but those income levels will take a LONG time to reach levels where those home prices are affordable- and that is assuming home prices don't go up any further. There will almost surely be a bust- but we just have no idea when that would be.
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Old 04-24-2014, 06:43 AM
 
10,847 posts, read 11,258,456 times
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Quote:
Originally Posted by gen2010 View Post
In the past 10 years, China's read GDP is going up by 8% a year. Inflation is about 4% a year. Average housing price is going up 10% a year, so it is lower than the growth of nominal GDP.

In a typical coastal city, like Wuxi (one of the best developed area in Yangzi Delta), the price for a 100 square metre apartment in a good location is about 1 million RMB or 160k USD. It is actually very cheap for the locals, who make about 30k USD per household. Remember unlike in US, the savings rate is very high. So the household there can save 50% of their 30k USD annual income.
Wuxi is not a typical coastal city. It is one of the richest cities in the entire China. It is not even a COASTAL city, it is more than 2 hours drive from the coast.

Urban Wuxi residents have an average disposal income of RMB 38000 (a bit more than $6000) per year in 2013. I don't know where you get your 30K USD household income come from. Maybe among the people you know but definitely not general. Even Shanghai isn't there yet.
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Old 04-24-2014, 06:59 AM
 
1,011 posts, read 628,280 times
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Wuxi is not a coastal city, but it is in the coastal area. 30 minute by train to SH, which is a coastal city.
Let's say you are right about your figure 38k RMB per person. In a household of 3, that is 110K a year, which is close to 20K USD per household.

However, that figure is lower than reality, as a lot of peasant population or low income immigrants are counted. They normally are not able to afford to buy property in the city.

Quote:
Originally Posted by botticelli View Post
Wuxi is not a typical coastal city. It is one of the richest cities in the entire China. It is not even a COASTAL city, it is more than 2 hours drive from the coast.

Urban Wuxi residents have an average disposal income of RMB 38000 (a bit more than $6000) per year in 2013. I don't know where you get your 30K USD household income come from. Maybe among the people you know but definitely not general. Even Shanghai isn't there yet.
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Old 04-24-2014, 07:43 AM
 
183 posts, read 210,091 times
Reputation: 161
Quote:
Originally Posted by gen2010 View Post
Narrow minded Americans who do not know the outside world.

Each year, Shanghai added half a million new residents. How many can NY add?
Shanghai is one of the most fast growing cities in the world. with last 10 years, it has added more than 400 km subway network. How much has NYC added to it pathetic subway? Maybe 0?

I know Manhattan is expensive. Why? those bankers make a obscene amount of money by screwing up the average guys.
You do not make any sense.
New York is at its full capacity of a fully developed nation.
It cannot be compared to Shanghai, a city of a developing nation that is in its phase of urbanization.
Comparing Shanghai to New York in it self is not fair, it's like comparing a cheap Chinese phone to the latest iPhone.
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Old 04-24-2014, 07:53 AM
 
1,011 posts, read 628,280 times
Reputation: 283
So why you guys think it is a bubble in Shanghai, while it is not a bubble in NYC? Where is the logic? Do not forget the biggest housing bubble in human history happened in USA, not in China.

The reason why I mentioned the population growth is that with this amount of demand for housing, the price in Shanghai is indeed reasonable. Higher demand means higher price, as easy as that. If you add half a million residents each year, why on earth would the price of housing drops?

Quote:
Originally Posted by Tdiva View Post
You do not make any sense.
New York is at its full capacity of a fully developed nation.
It cannot be compared to Shanghai, a city of a developing nation that is in its phase of urbanization.
Comparing Shanghai to New York in it self is not fair, it's like comparing a cheap Chinese phone to the latest iPhone.
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