As I’ve told many of my friends. I’m bearish on real estate in China. A quick trip to China will tell you why:
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Abnormal vacancy rate
Many of the properties in China have no one living in them… because upper middle class and above each own several properties, and never even consider renting them as they believe capital gain is certain
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Bears have been calling correction for years but nothing happened… So?
The price WILL start to fall once people start to sell. And when do they start selling? Either when others are selling so price tanks… or they need cash… Looking at the debt in China at an alarming level (nobody knows what the number truly is), when companies begin to default on debt, owners will be forced to sell properties
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Housing prices are simply just too high
In China / Hong Kong, income growth has lagged significantly behind housing price appreciation… Yet prices keep going up… WHY? Because buyers are not income earners.. they are business owners (links back to point 2)
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Sentiment is extremely dangerous now
People already have properties want to keep buying property… Others are finding all means to buy a new property… Everybody believes that if they do not buy NOW, they will just end up paying a lot more. This is getting closer to “bubble” sentiment.
What’s your view on Chinese real estate market? Comment below!
Robert Luo
Robert Luo 