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This is misleading and not very useful. Property and incomes are very local, so looking at the data at a country level doesn't tell you much. For example, in
by mdorazio 5y ago
This is misleading and not very useful. Property and incomes are very local, so looking at the data at a country level doesn't tell you much. For example, in the US there is a massive variance in the ratio between different cities [1] and between cities and rural areas. Your China example is a great one for where the data especially falls apart - China has a very large rural, poor population while the large cities have grown significantly more affluent with prices and salaries to match.
[1] https://archive.md/aU31p https://archive.md/aU31p
- zadwang 5y agoI suppose the data was an average. If only considering the big cities the ration would be much higher then (even worse).
- esrauch 5y agoI think his point was that it's more likely taking the total income and total property costs and computing the average that way. But if you instead compute the same per-city and then look at the middle of those it can give you a drastically different value.
- joshgachnang 5y agoNo, the ratio is lower in cities [1], only 16.9 in Beijing, which has the highest city ratio. I'm guessing because of the very large poor population, it drags the average income down, whereas people in cities aren't making poor farmer wages, so the individual city ratios are lower. [1]: https://www.lincolninst.edu/sites/default/files/pubfiles/sun_wp20ls1.pdf https://www.lincolninst.edu/sites/default/files/pubfiles/sun... see page 11
- jjk166 5y agoNo, in the cities the incomes are also far higher than in the rural areas. The overall effect is the result of Simpson's paradox [0] https://en.wikipedia.org/wiki/Simpson's_paradox https://en.wikipedia.org/wiki/Simpson's_paradox
- daoismyname 5y agoI think it's the opposite. If the majority of population lives in rural areas, the prices of big cities have a major impact on the average, skewing it. But actually people living in the big cities can afford housing more than a person with "rural area" salary can afford the average price, even though they are most likely able to afford the much lower prices in their area.
- oyashirochama 5y agoDifferent? yes. To match the growth expansion of prices? Absolutely not. An apartment not even within main cities or rather 2nd or 3rd tier cities will still cost 300-500k USD, is made of questionable design and safety, isn't much more than a concrete box, and you don't even full own the land but rent it from the builders who actually purchased the right from the CCP for 70 years.
- em-bee 5y agoin the third tier city where i am right now, high quality apartments go for 200kUSD or less. i don't know about those of questionable design and safety but i can't imagine that they go for anything but less than half that.
- thehappypm 5y agoAgreed this is a huge exaggeration. You can buy a studio in midtown Manhattan for $300k or a 2 bedroom in Boston for $500k.
- bally0241 5y agoA 2 bedroom in Boston for $500k, where are you shopping, Dorchester?
- thehappypm 5y agoJP and Brighton, nice parts of town.
- AceyMan 5y agoI don't know those markets much but, prima facie, those numbers seem like hooey. Citations definitely needed.
- thehappypm 5y agoZillow it yourself. $300k is the going rate for a studio near the UN in Midtown. $500k goes far just outside the downtown core of Boston in places like Brighton or Jamaica Plain or Dorchester.
- namelosw 5y ago> China has a very large rural, poor population while the large cities have grown significantly more affluent with prices and salaries to match. What you've said is true, but that doesn't mean the problem in big Chinese city is anywhere easier - the housing price is beyond afforable even for the affluent salaries. In my experience, large cities in China are more like Hong Kong where people have to work over 50 years to afford a house rather than 27 years. I live in Beijing, and the rent I pay is around $1100 per month, but the valuation of the house is conveniently around $1.1m - it's 1k months or 83 years. As a senior software engineer, I earn a pretty decent income but it would still cost me to work several decades to buy that. As another example for your reference, a colleague of mine - he saved money for quite some years by renting basement and spend nothing other than necessities, bought an 60m² old khrushchyovka (that old poor commie block the western world always laughing at) for around $1m. His story is very typical in China: even though he is that hardworking, he didn't afford it on it's own, but also plus his wife and 4 of their in-laws (it's so common that in China we call it "drain 6 pockets").
- seanmcdirmid 5y agoI still don't think that one bedroom apartment in Beijing is worth $1 million, even considering what Beijinger's make. And you can rent that same 1 million dollar apartment for just 8000 kuai (~1200$) a month also. Look at the price-to-rent ratios. China is definitely in a huge property bubble, possibly the biggest in history, by any measure.
- seanmcdirmid 5y agoI've heard many Chinese tell me that property is a good speculative investment because China is increasingly urbanizing, meaning those farmers move to the city have to live somewhere. But how can a poor farmer pay for that $1 million apartment the speculators are hoping to sell to them? It doesn't make sense.
- foogazi 5y agoThe poor farmer wont buy that $1 million apartment - but maybe the family that sells their $150,000 apartment to the farmer will
- seanmcdirmid 5y agoThere is no such thing as an apartment for $150k in Beijing. Maybe an ant tribe sub basement room without ventilation or a window?