16 ms·
Construction has kept rent in Chongqing, China to $75 a month
- lquist 8y agoWait so you’re telling me that increasing real estate supply can help control rent inflation!? SF take note
- hackeraccount 8y agoFunny that a communist country is demonstrating supply and demand curves.
- Bayart 8y agoI don't think anybody would call China "communist" beyond a symbolic level.
- jjoonathan 8y agoSure, but when the people who call themselves communists have a more competitive real estate market, it's still pretty damning.
- geofft 8y agoCool, so we can implement China's policies towards housing, industry, and private property in the US without anyone complaining about us being communists?
- funkaster 8y agoagreed. China feels more like a big oligarchy.
- yardie 8y agoIn China the people definitely do not control the means of production. The party controls that.
- dis-sys 8y agoI live in downtown Shanghai, my apartment is next to a block of land waiting for development. The land was auctioned more than 10 years ago to a private foreign developer, they just left the land there doing nothing waiting for the land value to go up. Such land hoarding is again the law and they finally managed to get media attention this week. Anyone following local news here in Shanghai should be able to tell the location I am talking about. You are partially right here, people do not control the means of production, way too many greedy foreign companies do. That Mr. Huang mentioned in the article is another good example, why should he be paid only $1,000 USD when the same Ford car he built is being sold way more expensive in China than in the US?
- baybal2 8y agoWhen I did a short term contract in SH in 2016, I lived near an "ultraluxury" highrise that was five years old. At 21:00, I was only able to count like 15 flats having lights on.
- atr_gz 8y agoWhy are you putting so much blame on foreign companies? Any statistics on WFOE in China to back that up?
- marcinzm 8y ago>why should he be paid only $1,000 USD when the same Ford car he built is being sold way more expensive in China than in the US? Because otherwise he'd be paid $0 since it'd be cheaper to manufacture the car somewhere other than China. Also, Chinese politicians are perfectly free to require such things so it's odd that you're blaming western companies which only have power in China because politicians let them have power. Of course, massive unemployment rates tend to cause more issues so it's clear why they don't.
- onetimemanytime 8y agoCommunist? NOPE. See all the billionaires and social classes in China. Dictatorship dressed up as communism, yes. The current ruling class in China is very aware that people need to be happy with basic necessities or else.... That's all.
- TomMarius 8y agoDon't tell them it's a law of economics, they might want to try to vote to change it
- qaq 8y agoWhy would real estate owners acting in their own self interest want that ? The funny thing I notice is that the left rhetoric evaporates as soon is it has a chance to affect valuation of persons own assets.
- deleted 8y ago[deleted]
- njepa 8y agoIt isn't just supply though, but essentially inequality. Chinese cities have completely different demographics than western cities. If you want to live somewhere popular in China rents, and real estate values, are rapidly increasing. Housing isn't like manufactured goods where the marginal cost decrease the more you make. Since the more you build in one area the less available space there is. If you want to decrease cost you have to supply more space. Still that is only the supply side. As long as there are people, or even an increase of people, that are willing to pay it never becomes affordable even if there are comparable.
- hellcow 8y ago> Housing isn't like manufactured goods where the marginal cost decrease the more you make. Since the more you build in one area the less available space there is. If you want to decrease cost you have to supply more space. This was probably true in 1750, but today you can build up. A 2000 SQ foot home can become a 40,000 SQ foot tower.
- ClayShentrup 8y agoExactly. We can increase density. There isn't unlimited land, but there aren't unlimited resources for any product.
- fulafel 8y agoMarginal building cost per unit of space increases in this case.
- dmoy 8y agoRight but sometimes the super expensive part is just the land it's built on. My unit has a construction cost that's significantly less than half of my unit's total value. The tiny one story ramblers across the street all sold for over a million a pop, but the houses were worth ~negative to the purchaser and got torn down and replaced.
- bufferoverflow 8y ago
- ww520 8y agoFalse comparison to SF. Build dense highrises in the middle of nowhere of course make the rent cheap. The dense highrises in the middle of Shanghai would have outrageous rent. Desirable places are always expensive.
- ackbar03 8y agoI think that kind of breathing room is also important for fostering entrepreneurship. I moved to China from Hong Kong, you do have some people bumming around but you also have some pretty bright people who quit their jobs to really grind and work on a business idea. I can't imagine doing that in hk, pretty soon your just priced out of soaring rent and cost of living
- tim333 8y agoI stayed in Guangzhou and was struck by how differently they'd handled housing compared to London or SF. Basically there were a lot of approx 35 story similar tower blocks and most people used public transport/taxis rather than having cars. There's really no reason why London/SF couldn't do that apart from government policy. I live in London and like it but wonder if having all the property being some silly multiple of wages is the best way to do things. This kind of stuff https://www.scmp.com/magazines/post-magazine/article/1761639/guangzhous-changing-face-city-its-people-cant-recognise-any https://www.scmp.com/magazines/post-magazine/article/1761639... You'd want to put them in kind of nondescript areas to avoid taking out the historic stuff as mentioned in the article and maybe pay out 50% above market to existing buildings in the way so they are not too pissed off but it could be doable.
- lazyjones 8y ago> You'd want to put them in kind of nondescript areas to avoid taking out the historic stuff as mentioned in the article and maybe pay out 50% above market to existing buildings in the way so they are not too pissed off but it could be doable. And, presumably, they'd be as cheap as possible, leading to higher probability of hazards like at Grenfell Tower?
- baybal2 8y agoRead the backstory. Isocyanate foam maker lobbied cheaper rockwool makers out of the country in UK, with all blessings from the "elites"
- tonyedgecombe 8y agoThe council spent quite a lot of money on Grenfell tower, I seem to remember it worked out at £66K per flat.
- tim333 8y agoI was thinking more medium quality. A lot of London stuff seems to either be bad council construction or £1m+ extra lux.
- sgt101 8y ago
- baybal2 8y agoSome times I feel that HN is a real estate forum. People, why are you so crazed about housing? :) I have following thing to say about real estate in China as a person who's been going in and out of China for last 12 years: conventional supply and demand economics fail to rationally explain the market, alike many other things in the country. There are big cities with really constrained supply, not unlike California, and still having low rents, and there is Shanghai, with new suburbs and microdistricts popping up every year, but still having highest rent in China despite high vacancy rate even in the city centre. Housing in China is also a very emotionally charged topic. A lot of status connotation is attached to it, and there is peer pressure like "no wife for you without a house." Most Chinese I meet can't conceal their bemusement when they see foreigners being so unconcerned with housing issue. These people don't know that in most of the world, renting an apartment, and moreover luxury one, is more expensive than paying for mortgage, and are utterly shocked when I show them the digits. Chinese don't realise just how blessed they are with low rents. And yes, there are still Chinese out there who are shocked discovering that "most Americans are still living in wooden houses," and that ones who live there tend to be richer than ones buying highrise apartments.
- sampo 8y ago> conventional supply and demand economics fail to rationally explain the market This is true for SF Bay Area as well.
- AmericanChopper 8y agoConventional supply and demand economics perfectly explains both of these situations. SF has a massive under supply of housing, and restrictive zoning rules that prevent supply from increasing. China centrally funds huge amounts of developments, and many of those developments aren’t met with massive demand, so they end up with a lot of real estate that they struggle to give away in some situations.
- notahacker 8y agoThrow into the mix the fact that San Francisco wages are approximately 10x Chongqing wages with land at a premium as a result, and so even without zoning restrictions in SF you'd expect new development there to be expensive (and similarly even without government-subsidised overbuilding in Chinese second tier cities you'd expect rental costs to be lower than most Western cities)
- AFascistWorld 8y agoUsing Chongqing as example is kinda cheeky, it's a west side big city, but a rare one in which speculators haven't found the runaway success seen in other ones.
- seanmcdirmid 8y agoChongqing is crazy overbuilt, which is weird since everything is so hilly there (think Seattle or San Francisco and then add even more hills). A lot of the speculation is along the lines that China is quickly urbanizing and farmers will eventually buy these apartments, but the farmers aren’t really rich enough to support the returns the speculators are looking for. Chengdu is probably in a similar boat to Chongqing. Well, any tier 2 city actually.
- dis-sys 8y ago> Well, any tier 2 city actually. Just came back from Hangzhou, the entire city is flooded with people in their early 20s. I think the speculation is mainly on those annual 10 million university graduates joining the workforces. Farmers are not going to buy those apartments in tier-2 cities, their sons/daughters with university degrees sometimes at postgraduate level are the ones buying.
- seanmcdirmid 8y agoThere isn’t an infinite supply of those graduates. In fact, China is in for a serious demographic crunch over the next few years. Those kids are mostly from the cities anyways, rural education still has a long way to go (never met anyone at work in Beijing with a rural hukou, but maybe they just wouldn’t talk about that).
- whoevercares 8y agoHangzhou is tier-1, for sure.
- seanmcdirmid 8y ago
- bearjaws 8y agoWow when you don't treat housing as an investment it turns out that prices reach sane levels? Who knew?
- xvedejas 8y agoIt's impossible to treat housing as an investment when so much is being built every year. There's no scarcity. In Japan, and probably also China, houses are depreciating assets.
- zanny 8y agoThere is tremendous housing scarcity where housing is scarce and in demand, such as with transit access to major metro areas. The depreciating housing is in places people don't want to live. In general modern societies are centralizing in cities to a degree never before seen, but that migration is stymied by catastrophic amounts of NIMBYism and regulation holding back density. In Tokyo most properties don't depreciate that much if at all, and modern Japanese building code means new structures are much more permanent and last longer. It takes time for the culture to shift as with all things, but the Tokyo metro won't stay contrarian to every other metro for long - its been trending away from the always-deprecating building for over 30 years now.
- mcguire 8y agoBack in the late 80s and early 90s, Japan introduced 100 year mortgages (https://www.sciencedirect.com/science/article/abs/pii/1061951895900047 https://www.sciencedirect.com/science/article/abs/pii/106195...). Then the economy went into a multidecade slide.
- zanny 8y agoPeople are going to treat housing as an investment so long as government institutions artificially constrain it to such a preposterous degree that you can exploit unmet demand in perpetuity. Even in China precincts with more recognized property rights will see this effect where even on massive government works projects contractors just build around holdouts whom can exploit the growing demand for the land they are on.
- quotemstr 8y agoOf course housing is subject to the iron law of supply and demand. It's remarkable that so many people find seemingly-reasonable justifications for denying it. There must be a name for this pattern, which occurs in areas of life as varied as technical debates, climate science, and health. The common thread is that there's some strong effect that smart people would prefer not to be true and that these smart people spend an inordinate amount of time and social capital finding seemingly-rational justifications for denying this strong effect. The result of this high-IQ motivated reasoning is an impenetrable mess of dueling blog posts, cherry-picked studies, and sophisticated personal sniping that leads regular people to throw their hands up in confusion and do nothing. An example of this effect: the "zombie claim" (an idea that keeps circulating after being debunked, mostly because it's rhetorically useful) that building housing doesn't decrease prices because developers build only high-end housing. Granted, this effect might be true for very limited times under very limited circumstances in some special region of the supply curve, but it's clearly not a general principle. But there are just enough studies purporting to show this effect that people who want to block housing in general can point to some official-looking LaTeX-typeset thing and say "Look! Economics proves that construction doesn't lower prices!". By the time someone gets around to reading that article and commenting, "if you read beyond the abstract, the article it doesn't say that...", someone's already made some other blog post with the same discredited idea. It goes on and on and on and on and on. I've become increasingly convinced that the whole scientific and rational enterprise only works in collaborative mode, when there's some shared desire to find the truth. You can never convince someone of something by using reason and evidence, and your counterparty will suspect (rightfully so!) that your "evidence" is just the sort of rhetoric-disguised-as-dialectic that I'm talking about. It's a dismal conclusion.
- moosey 8y ago> You can never convince someone of something by using reason and evidence, and your counterparty will suspect (rightfully so!) that your "evidence" is just the sort of rhetoric-disguised-as-dialectic that I'm talking about. I personally agreed with your general idea, but the place where we are today was developed intentionally via propaganda systems designed to question the validity of expertise. If a person believes that government bureaucrats are all ineffective, that vaccines are dangerous, that all scientists believed a new ice age was going to start back in the 80's, then it is very easy to deny anything that experts say, and that your gut is right most of the time. This, of course, couldn't be further from the truth. There are huge swaths of humanity that are willing to change their opinions based on the presentation of evidence. What is clear is that they are not good at generating enough political power to start the grand collective ideas that are necessary to fight homelessness locally (I know that I'm having trouble pushing housing first ideas - I think that Americans are punitive, culturally), or to fight climate change globally. Still a dismal conclusion.
- klrr 8y agoJust want to shime in and recommend you to visit Chongqing. Incredibly interesting city to explore, great food and still has some rural China vibe that the other first tier cities start to lack.
- _kyran 8y agoAnywhere in particular you would recommend exploring for a future visit? I was there for two days earlier this year and felt like I just scratched the surface.
- billfruit 8y agoI wonder how the traffic is like in these large Chinese cities. In India, esp Bangalore traffic and the crowding in the streets has grown up astronomically, and the road system can barely handle it.
- mixmastamyk 8y agoCurrently the top comment: "Basically there were a lot of approx 35 story similar tower blocks and most people used public transport/taxis rather than having cars." My understanding is that traffic does increase until a certain threshold of density is achieved and then it craters from there. Cities should probably be designed just above that.
- LoSboccacc 8y agoand population control, that's an important factor controlling demand trough time
- swiley 8y agoThe result of Chinese population control is a significantly higher number of men than women. I'd personally rather pay more rent than live somewhere like that.
- LoSboccacc 8y agoof course I agree with you
- redm 8y agoI think a more appropriate comparison is Chongqing and Tokyo.
- baron816 8y agoSo much of the arguments over housing contain some sort of slippery slope statement of "I don't want my city to become Hong Kong or Dubai." But imagine if SF/SV started building housing that looked a lot like Amsterdam https://www.jetsetter.com/uploads/sites/7/2018/04/lVBcs3gf-1380x690.jpeg https://www.jetsetter.com/uploads/sites/7/2018/04/lVBcs3gf-1..., Paris https://c8.alamy.com/comp/RR1A0X/elegant-parisian-apartment-block-along-rue-raumur-paris-france-RR1A0X.jpg https://c8.alamy.com/comp/RR1A0X/elegant-parisian-apartment-..., or even New York https://static01.nyt.com/images/2014/05/11/realestate/20140511-EXCLUSIVE-slide-2S7H/20140511-EXCLUSIVE-slide-2S7H-master1050.jpg https://static01.nyt.com/images/2014/05/11/realestate/201405.... Those 5-10 story town houses are far nicer than anything that exists in SF and would provide a huge boost in density. Sure, it would be hugely expensive to recreate something that nice today, but the point is that you can create a beautiful, dense city without going really tall.
- pg_is_a_butt 8y agoDo you know even the first thing about earthquakes? You're an idiot.
- jetrink 8y agoI completely agree that those areas should allow more 5-10 story buildings, but let's not kid ourselves about what they would look like. They would be One-Plus-Fives [1]. 1. http://archplanbaltimore.blogspot.com/2015/03/how-one-plus-five-is-shaping-american_27.html http://archplanbaltimore.blogspot.com/2015/03/how-one-plus-f...
- ema 8y agoThis is a question to which I haven't found a satisfying answer yet: why do old houses look better than new ones? There are answers like "only good looking houses got preserved" or "it's just perception, in a hundred years people will love the houses being build now as much as the houses which were build in the nineteenth century". I don't really buy such arguments. I had some musings about people no longer caring about living in a beautiful house because with fast transportation there is less incentive to make a good impression on your neighbors. Or maybe it's something about craftsmen making less design decisions because of more planing and prefabrication. But these too are just speculations.
- Canada 8y agoArticle makes me wonder if author ever set foot in Chongqing
- mcguire 8y agoChongqing: Apartment (1 bedroom) in City Centre 307.91 $[1] Average Monthly Net Salary (After Tax) 825.35 $[1] 37% San Francisco: Apartment (1 bedroom) in City Centre 3,386.72 $[2] Average Monthly Net Salary (After Tax) 6,497.75 52% Oklahoma City: Apartment (1 bedroom) in City Centre 857.50 $[3] Average Monthly Net Salary (After Tax) 2,639.56 $[3] 32% [1] https://www.numbeo.com/cost-of-living/in/Chongqing?displayCurrency=USD https://www.numbeo.com/cost-of-living/in/Chongqing?displayCu... [2] https://www.numbeo.com/cost-of-living/in/San-Francisco https://www.numbeo.com/cost-of-living/in/San-Francisco [3] https://www.numbeo.com/cost-of-living/in/Oklahoma-City https://www.numbeo.com/cost-of-living/in/Oklahoma-City
- foota 8y agoNot sure exactly what your point is. Oklahoma City has a density of 235 people per square mile according to http://www.usa.com/rank/us--population-density--metro-area-rank.htm http://www.usa.com/rank/us--population-density--metro-area-r.... San Francisco's is 1300. Of course it's cheaper to house people when land isn't scarce.
- Hello71 8y agoNot sure exactly what your point is. Chongqing has a density of 960 people per square mile according to https://en.wikipedia.org/wiki/Chongqing https://en.wikipedia.org/wiki/Chongqing.
- foota 8y agoThe wikipedia entry (and the official entity?) is closer to a US state or large county, with a size of 31,000 square miles (this would put it at ~the 40th largest state). If you take the urban population listed there and divide by the listed urban area you get 4,250. A bit above 960.
- osdiab 8y agoWhat I see people missing here is the transportation aspect - land is only scarce in San Francisco if it’s permanently limited to a 7 by 7 mile square. Transportation increases the viable size of where you can live to access the city. So make land less scarce by building fast transit from other places. That all said, it’s also a joke to think that SF uses its land wisely. What’s at the 24th st mission BART stop? A 1 story McDonald’s, what a great use of prime real estate to protect a treasured cultural relic.
- g9yuayon 8y agoIsn't this simple supply and demand? The housing price is too high? Build more houses or apartments. Yet San Francisco authorities tried every possible way to suppress supply: rent control and all kinds of regulations, to say the least. So much for so called "we fight for poor people".
- swiley 8y agoAre there any countries that do this and don't have really scary censorship and speech policies? I'd definitely want to live somewhere like that. It wouldn't be hard to end up financially independent in a place like that on a SWE salary.
- Proven 8y agoThanks for giving the submitted article a shitty and completely irrelevant title