China Is On `Treadmill to Hell' as Property Prices Will Burst

The China real estate thing is definitely a concern, but the country has two things going for it:

1. They are a country of savers instead of debtors, so they don't have as much of a concern about a huge foreclosure crisis (or at least, it would be slower and more controlled).

2. They have a billion people in rural areas. As they industrialize, those people are moving to urban centers - so they actually have an eventual need for all this real estate. The big question there is how fast they are are urbanizing.

 

I think China does have a big problem with real estate price going through the roof. However, this is not going to be the subprime bubble that hit the US part 2. I think 20% down payment is mandatory and now it might be up to 30%, there is talk of pushing that to 40% recently. The problem is that average Chinese are spending three generations of savings for a home (grand parents, parents helping the grand kids), this just cannot keep up. The price of home compare to wages and rent income have to come down at some point.

 

Is their a short etf?

 

There are a few, FXP being one of most popular. There are a few ppl on clutch claim to be actively invested in china short etfs.

 

Well this concern has been going on for several years now. Real Estate prices in major Chinese cities have gone up as much as by 5 times. Yeah, that was a missing opportunity if you didn't know to invest in China.
The cry of wolf is not news. Everybody in China knows it, debates on how the regulations should control the market, property laws, etc are everywhere among scholars and common people.
But the problem is more complicate than you thought, and many don't even think there is a bubble.
One thing make the China Real Estate unique, compare to that of Hongkong or Tokyo is that even w/ the high real estate price, mortgage isn't high at all, and Chinese banks maintain more strict lending standards than most other countries, including the US.
We can probably devote a whole board just talking about Chinese real estate market, what went wrong or not. The issue is not going to be cleared out w/ some quick responses, I fore-warn.

 

When parts of Shanghai is more expensive than New York or Boston, it will seem out of whack. Remember people will always find reasons to justify the bubble, no matter how big it is, just like what happened in US.

 

Yeah I know. But very major city in the pacific region has that problem, Moscow, Tokyo, Seoul, Hongkong, Taipei ...
I am a little skeptical about bubble is the fact Chinese has a healthy debt ratio in real estate market. I think the statistics is like only 50% of the money is borrowed from bank to buy a house. While the 50% might be still high in absolute value to average Chinese, it is certainly not like lending/borrowing spreeing contributed to the bubble in the US.
Also, there is a line of argument that Chinese are transforming from property-less to property in condos for the first time in a long time. Those accumulated savings during that time contribute to the price spike, but they are solid backings nontheless. Also there is the factor of one child policy and Chinese culture that parents sponsor the condo financially for kids.
All those taken into account make it somewhat unique.

 

That's actually not a good example.
It's a matter of demand and supply.
Most expansive properties in SH are actually often bought by cash, insane amount of cash.

 

What people in the US do not realize is that China now have a significant number of rich people, and they want to live in cities like Shanghai, or at least buy a home there.