No bubble in China - Credit Lyonnais report

[besotted]

PRC is the best. We need to import 1 million PRC young grads to secure our future.

We need them over 5 to 10 years. Do it!

I love PRC

I worship PRC

PRC is the best of the best!


http://www.businesstimes.com.sg/sub/suite/story/0,4574,421204,00.html?

China market not a bubble as incomes are rising with prices


(SHANGHAI) China's property market is not a bubble because household incomes are rising in line with housing prices, according to Andy Rothman, CLSA Asia-Pacific Markets' China macro strategist.


Housing prices in so-called second-tier cities, where most urban Chinese live, are about 75 per cent lower than in larger cities such as Beijing and Shanghai, and price increases are slower, Mr Rothman said.

'With leverage this low and with house prices rising in line with income, these are not bubbles,' he said. 'There are obviously individual segments of the market which have problems. But in terms of systematic problems, I don't see it.'

Jim Chanos, the hedge fund manager who was one of the first investors to foresee the 2001 collapse of Enron Corp, reiterated last month that China is on a 'treadmill to hell' because of a reliance on property development for economic growth.

Home prices in the nation's 70 cities rose for an 18th month in November, according to the statistics bureau, after measures including limiting the number of house purchases and suspensions of mortgage loans for third homes failed to curb price gains. Housing prices in Chongqing rose 29 per cent last year while those in Shanghai climbed 26 per cent, according to Soufun Holdings.

Larger cities, where housing price gains are excessive, account for about 5 per cent of China's new home sales transactions, said Mr Rothman, referring to Beijing, Shanghai, Guangzhou and Shenzhen. Property prices nationwide have risen by an average 10 per cent per annum over the past six years, compared with an average 13 per cent increase in household incomes, he said.

'That's really a pretty healthy balance, and people tend too much to focus on first-tier cities,' said Mr Rothman. He expects household incomes to increase 10 per cent in 2011, while the economy grows at a rate of 9.5 per cent. -- Bloomberg

 

[longbow]

Many fail to realize that unlike 1st world nations, China does not have a large stock of decent housing. The years of communism created a bunch of lousy housing with poor plumbing, electrical, no elevators for high rises. You see Soviet era housing and you can get an idea (Soviet was the developed communist brother). There is none of that quaint Parisian 100 year apt on top of the bakery deal. It is pretty much mudbrick houses or Soviet era flats.

Also there is that sheer numbers that China has. HDB just celebrated its 1 million flat. Shanghai alone has 20M people.

That is why I feel there is really no oversupply of newly constructed apts as people move from rural areas into cities to get better paid jobs with better benefits.

Of course in the top tier cities where the rich Chinese and foreign investors want to live, prices have reached bubble levels. But in the numerous second tiers where the foreign investors have no interest, things are still fine.

 

[GoFlyKiteNow]

Many fail to realize that unlike 1st world nations, China does not have a large stock of decent housing.

Ooops...are you kidding again ?....Consistent reports last one year say that China have over 62 million empty apartments. Entire newly constructed townships and cities lie vacant for some time. Is this not a sign of bubble syndrome ?

 

[Dreamer1]

Ooops...are you kidding again ?....Consistent reports last one year say that China have over 62 million empty apartments. Entire newly constructed townships and cities lie vacant for some time. Is this not a sign of bubble syndrome ?

62 millon empty apartments out of 1.3 billion people,it is equivalent of 240,000 empty apatments out of our 5 million people,readers can draw their own conclusion.

 

[GoFlyKiteNow]

62 millon empty apartments out of 1.3 billion people,it is equivalent of 240,000 empty apatments out of our 5 million people,readers can draw their own conclusion.

How does one extrapolate these figures to a logical conclusion?
Therein lies the answer !

BTW - taking your figures 240,000 flats to 5 million people.

Assuming 4 people in a family, to a flat, that works out to 1.1
million units needed to house them.

And the supply side is 1.340 Million flats.
Out of which 240,000 flats are surplus ?

 

[Dreamer1]

How does one extrapolate these figures to a logical conclusion?
Therein lies the answer !

BTW - taking your figures 240,000 flats to 5 million people.

Assuming 4 people in a family, to a flat, that works out to 1.1
million units needed to house them.

And the supply side is 1.340 Million flats.
Out of which 240,000 flats are surplus ?

Of course one major factor is the household income.

The main problem with PRC housing supply is that houses are built for the bourgeois,whilest their Great Proletarian are desperate for decent housing.