5 ms·

It's worth noting that month-on-month price fluctuations are prone to noise and are fairly poor indicators of a more general price trend. This is why the Case-

by holdenc 16y ago

It's worth noting that month-on-month price fluctuations are prone to noise and are fairly poor indicators of a more general price trend. This is why the Case-Shiller housing indices are a three month moving average. That said, no doubt there are declines to come in the Chinese property market.

huetsch 16y ago
This article from May of last year claiming a 31.4% m/m plunge is interesting: http://www.economicsjunkie.com/beijing-property-prices-plunge-31-4-in-one-month/ http://www.economicsjunkie.com/beijing-property-prices-plung... It's possible that there are significant seasonal fluctuations in the market. That said, the three-month average is still significantly negative: "Beijing property prices rose 0.4% m/m in February, 0.8% in January and 0.2% in December". And word on the street is that it's getting a lot harder to sell property. I'd be interested to see a graph with average housing price data stretching back for the past few years.
cturner 16y ago
> That said, no doubt there are declines to come in the > Chinese property market. I'm interested when I see predictions like these, because it's possible for people to make money on them. You have no doubt - have you taken a position in order to profit from the certainty? If not - is it possible you have doubts?
- orijing 16y ago
  That raises an interesting point. How would you take advantage of such a conviction? Can you short the property market in China, for instance?
  - cturner 16y ago
    Hmm. No. Good criticism :)
  - radicaldreamer 16y ago
    You short commodities. A sharp downturn in the chinese housing market will cause a lot of Chinese to lose their savings which are tied up in property, causing a recession, and sharply reducing commodity prices. This is something that the Chinese government wouldn't mind too much either because the rise in commodity prices beyond a certain point (and we're getting pretty close) will cause political disruptions- which is the absolute last thing that the government will accept. There was a confluence of factors that drove the unrest these past few months in the middle east, but one of the biggest was the sharp increase in commodity prices, especially food and basic supplies.
    - orijing 16y ago
      I think the link is too far, so you'll be exposed to a lot more than just the housing market. In finance, if you have a certain bet, you bet on that (and hedge against all other changes), in order for your returns to be based on your bet. That's why hedge funds outperform on average.
      - radicaldreamer 16y ago
        Interesting... what about being long gold? I imagine that a housing crash in China would drive investors into precious metals due to the lack of options available for chinese savers.
- roel_v 16y ago
  If the Chinese market was more open, people would have already. The problem is that many players are large SOE's, with no publicly traded stock, and certainly not available to foreign investors. Furthermore they're kept afloat by the government. 'Normal' Western financial doctrine doesn't apply in China's mercantilist 'market' (in quotes, because it's sufficiently different from what is considered a 'market' in the West that one can wonder if they're comparable).
- dagw 16y ago
  There are two parts to a prediction, "what" and "when". Just getting that What part right, without also getting that "When" part right can lead to huge losses. Hell just look at LTCM, they almost brought the financial market down by be wrong, not about what would happen long term, but how long it would take to happen. Or to quote Keynes, "The market can stay irrational longer than you can stay solvent".

by holdenc 16y ago

huetsch 16y ago

This article from May of last year claiming a 31.4% m/m plunge is interesting: http://www.economicsjunkie.com/beijing-property-prices-plunge-31-4-in-one-month/ http://www.economicsjunkie.com/beijing-property-prices-plung... It's possible that there are significant seasonal fluctuations in the market. That said, the three-month average is still significantly negative: "Beijing property prices rose 0.4% m/m in February, 0.8% in January and 0.2% in December". And word on the street is that it's getting a lot harder to sell property. I'd be interested to see a graph with average housing price data stretching back for the past few years.

cturner 16y ago

> That said, no doubt there are declines to come in the > Chinese property market. I'm interested when I see predictions like these, because it's possible for people to make money on them. You have no doubt - have you taken a position in order to profit from the certainty? If not - is it possible you have doubts?

orijing 16y ago
That raises an interesting point. How would you take advantage of such a conviction? Can you short the property market in China, for instance?
- cturner 16y ago
  Hmm. No. Good criticism :)
- radicaldreamer 16y ago
  You short commodities. A sharp downturn in the chinese housing market will cause a lot of Chinese to lose their savings which are tied up in property, causing a recession, and sharply reducing commodity prices. This is something that the Chinese government wouldn't mind too much either because the rise in commodity prices beyond a certain point (and we're getting pretty close) will cause political disruptions- which is the absolute last thing that the government will accept. There was a confluence of factors that drove the unrest these past few months in the middle east, but one of the biggest was the sharp increase in commodity prices, especially food and basic supplies.
  - orijing 16y ago
    I think the link is too far, so you'll be exposed to a lot more than just the housing market. In finance, if you have a certain bet, you bet on that (and hedge against all other changes), in order for your returns to be based on your bet. That's why hedge funds outperform on average.
    - radicaldreamer 16y ago
      Interesting... what about being long gold? I imagine that a housing crash in China would drive investors into precious metals due to the lack of options available for chinese savers.
roel_v 16y ago
If the Chinese market was more open, people would have already. The problem is that many players are large SOE's, with no publicly traded stock, and certainly not available to foreign investors. Furthermore they're kept afloat by the government. 'Normal' Western financial doctrine doesn't apply in China's mercantilist 'market' (in quotes, because it's sufficiently different from what is considered a 'market' in the West that one can wonder if they're comparable).
dagw 16y ago
There are two parts to a prediction, "what" and "when". Just getting that What part right, without also getting that "When" part right can lead to huge losses. Hell just look at LTCM, they almost brought the financial market down by be wrong, not about what would happen long term, but how long it would take to happen. Or to quote Keynes, "The market can stay irrational longer than you can stay solvent".