Understanding China, One Blog at a Time

An American in China

Housing Bubble in China

Posted by w_thames_the_d on December 22, 2011


For all of those whose brains were incapable of understanding that property prices in China were way off kilter, you can read this article, see excerpt below.
When one considers that one half a million bucks buys you 100 square meters of poor quality Beijing grunge house built to last about a decade, one quickly realizes that such prices are sustainable.
Consider this
-Chinese houses on the average last only 30 years then fall apart. This is actually good news as in China you only are allowed to own your home for 70 years from the date it was built. In addition, in China you do not own the land below your home nor the airspace above. You also do not own the trees, ie it is illegal for you to cut them down, should you have them.
When considering all of these facts is it unreasonable to assume that to pay a million dollars for 200 square meters in a city like Beijing is not sustainable?
As such, like rats deserting the ship, Chinese are dumping investment houses.
from here
http://www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1102&MainCatID=11&id=20111223000022

“Speculators in Shanghai have begun dumping houses given the slump in property prices and because of fears over further hikes in property taxes.

2 Responses to “Housing Bubble in China”

  1. Brewskie said

    I even had one Chinese fellow contrast to me the difference between the US and Chinese property bubble: “At least the US buildings will last over 50 years, he said, “but how many poorly built Chines apartments will even be around in 30 years?”

    That appears to give one advantage to the US. Sure, the average US bridge is considered 7 years away from the end of its useful life; we have water pipes nearly 100 years old, and I’m fully expecting a dam to breach in the next 15 years, and cause loss of life. But hey, at least we’ll have dry roofs over our heads…

    So we’ll have to close a bunch bridges in the next 10 years. How many Chinese bridges will crash in this time span? I’ve been predicting large swaths of the vaunted high-speed rail network will be considered a failure in 10 years.

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