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> This bodes very ill for creditors. Foreign creditors account only for $25B of the $300B liabilities for Evergrande. I'm sorry - but any foreigner who lent Ev

> This bodes very ill for creditors. Foreign creditors account only for $25B of the $300B liabilities for Evergrande. I'm sorry - but any foreigner who lent Evergrande money thinking this wasn't a huge risk is a moron. > This will accelerate the real estate price decline in all parts of China, on top of the 30-40% drop we're seeing in Tier 1 cities, on top of the 50-60% drop we're seeing in non-Tier 1 cities. According to "official" sources - property prices aren't even down 5%. Where are you seeing that they're down 30-40% in Tier 1 cities? It would take the median couple >7 years saving 100% of post-tax income to afford a downpayment on the median 100 m^2 condo. If you assume even 3% interest - thereafter - the monthly payment would be >80% of their COMBINED post-tax income. China's property prices have astounded me since 2000 - and yet they continued to rocket higher for a solid two decades. People are NUTS in the US at Price to Income levels of 4:1 - when this is some of the lowest Price to Income for housing in the world. We consider places like Vancouver and London and Sydney ludicrous bubbles - and yet they are usually below 10:1. China was at 11:1 in 2000 and climbed to 17:1 by 2020: https://lipperalpha.refinitiv.com/2020/06/chart-of-the-week-chinas-house-price-to-income-ratio-exceeds-17/ https://lipperalpha.refinitiv.com/2020/06/chart-of-the-week-... Places like Shanghai have ratios of 38:1 and higher.

brianwawok 3y ago
Your math just says the median person doesn’t buy a condo. If only the top 10% can afford them, that’s still a huge pool of people. Pretty sure median US income can’t afford a condo in NYC.
- onlyrealcuzzo 3y ago
  At the end of the day - prices need to be supported by incomes (buyers or renters) or magic beans.
  - lmm 3y ago
    Sure. But the median Chinese income tells you very little about the distribution of Chinese incomes.
berserk1010 3y ago
cursory searches on western media reviews shows 20%, 25%, 30%. https://medium.com/alpha-beta-blog/even-beijing-home-prices-are-falling-a5e54139296e https://medium.com/alpha-beta-blog/even-beijing-home-prices-... https://fortune.com/2023/08/17/china-home-sales-worse-than-official-data-real-estate-crisis/ https://fortune.com/2023/08/17/china-home-sales-worse-than-o... https://sccei.fsi.stanford.edu/china-briefs/tier-3-cities-hotbed-trouble-chinas-property-sector https://sccei.fsi.stanford.edu/china-briefs/tier-3-cities-ho... My sources are from real estate agents in China. Not sure why anyone would actually trust official numbers from China. China still claimed 5% gdp growth last year. pretty laughable. Also, you can just watch what multinationals are doing. They have retail numbers from their Chinese stores. And it's pretty clear Japanese and Taiwanese and South Korean and American and European multinationals are all withdrawing.
- onlyrealcuzzo 3y ago
  A Medium post isn't a source. Your fortune article says PRICES are only down 2.4% (roughly the "official" stats). Your other article is about T3 cities.
  - berserk1010 3y ago
    It's all in the articles "Existing homes near Alibaba Group Holding Ltd.’s headquarters in Hangzhou have dropped about 25% from late 2021 highs, according to local agents." "Even as of March, before a fresh slowdown, more than half of tier-2 and tier-3 cities saw existing-home prices fall more than 15% from peaks," "residential housing prices in tier 3 cities dropped by nearly 20%." EDIT: Again, to get the real numbers, you need to have access to Chinese real estate agents. And these folks aren't going to be posting articles for everyone to read. Or if they post a video in anger, it will get taken down.
    - onlyrealcuzzo 3y ago
      A small section of a New Tier 1 city is not indicative of an entire T1 city.
HWR_14 3y ago
The foreigners probably loaned money to Evergrande a long time ago, before the issues started appearing.
- onlyrealcuzzo 3y ago
  The issues were apparent since 2000. The vast majority of Evergrande's outstanding foreign debt is from >2012. BlackRock, HSBC, and UBS poured in about $3B of the $25B in 2021 alone... And, I'm sorry - if you didn't see a risk doing that in 2021 - you're gonna lose all your money sooner or later. In BlackRock's case - it was primarily for 401k-ers for exposure to Chinese bonds. I think the US should've made it illegal - and probably will soon - to offer a product like that. Why anyone in the US would want exposure to Chinese bonds that don't even have good yields for "diversity" is incredible. Up next - Russian and Venezuelan 100-year bonds at 0% interest!
  - djbusby 3y ago
    If only someone had warned us!
  - seanmcdirmid 3y ago
    2012 was the year that Andrew Left publicized why he was shorting Evergrande stock, which he got banned for in 2016. I would say 2010 was when Evergrande started popping up in the news as possibly insolvent, 2000 is too early.
  - thriftwy 3y ago
    What's wrong with Russian bonds? That land is unlikely to be going away, may contain even more mineral wealth and is climate change resistant.
    - dgellow 3y ago
      Aren’t bonds linked to governments, not land? Russia the country can default.
      - deleted 3y ago
MrPatan 3y ago
> any foreigner who lent Evergrande money thinking this wasn't a huge risk is a moron. Or they are very smart while investing your money. Check your country's pension fund, see who manages it and what they invest in. Or better yet, don't.
wesapien 3y ago
Nice stats but people want housing condition to improve not degenerate to other countries lows. Should we thank our western overlords for sparing us from those conditions? No.
deadfoxygrandpa 3y ago
i live in shenzhen and i would love it if prices dropped 30-40%. i'd buy an apartment immediately lol. i've been checking real estate prices every once and a while for about 5 years now ready to buy if something shows up at a good price in an area i want to live in the reality so far is that prices have pretty much stayed flat for the past 4-5 years. there hasnt been any significant fall anywhere within like 1 hour of me in shenzhen
- berserk1010 3y ago
  I guess you weren't looking hard enough. Pre-owned housing prices in Shenzhen fell by nearly half from their peak in 2020 after holding up over the past two years of plunging new-home values amid slumping demand and a liquidity crunch for developers. https://www.caixinglobal.com/2023-08-25/shenzhen-existing-home-prices-fall-back-to-earth-102096492.html https://www.caixinglobal.com/2023-08-25/shenzhen-existing-ho... Meanwhile, according to Leyoujia store transaction data, second-hand housing prices in Shenzhen in the fourth quarter of 2023 were around 65,000 yuan per square meter, down 12% from 2022, and 22% lower than the all-time high in the first quarter of 2021. The transaction prices in some areas and real estate have already returned to 2018, and the drop compared to the highest point was as high as 30% to 40%. https://news.futunn.com/en/post/36099590?level=1&data_ticket=1706587237241941 https://news.futunn.com/en/post/36099590?level=1&data_ticket...

brianwawok 3y ago

Your math just says the median person doesn’t buy a condo. If only the top 10% can afford them, that’s still a huge pool of people. Pretty sure median US income can’t afford a condo in NYC.

onlyrealcuzzo 3y ago
At the end of the day - prices need to be supported by incomes (buyers or renters) or magic beans.
- lmm 3y ago
  Sure. But the median Chinese income tells you very little about the distribution of Chinese incomes.

berserk1010 3y ago

cursory searches on western media reviews shows 20%, 25%, 30%. https://medium.com/alpha-beta-blog/even-beijing-home-prices-are-falling-a5e54139296e https://medium.com/alpha-beta-blog/even-beijing-home-prices-... https://fortune.com/2023/08/17/china-home-sales-worse-than-official-data-real-estate-crisis/ https://fortune.com/2023/08/17/china-home-sales-worse-than-o... https://sccei.fsi.stanford.edu/china-briefs/tier-3-cities-hotbed-trouble-chinas-property-sector https://sccei.fsi.stanford.edu/china-briefs/tier-3-cities-ho... My sources are from real estate agents in China. Not sure why anyone would actually trust official numbers from China. China still claimed 5% gdp growth last year. pretty laughable. Also, you can just watch what multinationals are doing. They have retail numbers from their Chinese stores. And it's pretty clear Japanese and Taiwanese and South Korean and American and European multinationals are all withdrawing.

onlyrealcuzzo 3y ago
A Medium post isn't a source. Your fortune article says PRICES are only down 2.4% (roughly the "official" stats). Your other article is about T3 cities.
- berserk1010 3y ago
  It's all in the articles "Existing homes near Alibaba Group Holding Ltd.’s headquarters in Hangzhou have dropped about 25% from late 2021 highs, according to local agents." "Even as of March, before a fresh slowdown, more than half of tier-2 and tier-3 cities saw existing-home prices fall more than 15% from peaks," "residential housing prices in tier 3 cities dropped by nearly 20%." EDIT: Again, to get the real numbers, you need to have access to Chinese real estate agents. And these folks aren't going to be posting articles for everyone to read. Or if they post a video in anger, it will get taken down.
  - onlyrealcuzzo 3y ago
    A small section of a New Tier 1 city is not indicative of an entire T1 city.

HWR_14 3y ago

The foreigners probably loaned money to Evergrande a long time ago, before the issues started appearing.

onlyrealcuzzo 3y ago
The issues were apparent since 2000. The vast majority of Evergrande's outstanding foreign debt is from >2012. BlackRock, HSBC, and UBS poured in about $3B of the $25B in 2021 alone... And, I'm sorry - if you didn't see a risk doing that in 2021 - you're gonna lose all your money sooner or later. In BlackRock's case - it was primarily for 401k-ers for exposure to Chinese bonds. I think the US should've made it illegal - and probably will soon - to offer a product like that. Why anyone in the US would want exposure to Chinese bonds that don't even have good yields for "diversity" is incredible. Up next - Russian and Venezuelan 100-year bonds at 0% interest!
- djbusby 3y ago
  If only someone had warned us!
- seanmcdirmid 3y ago
  2012 was the year that Andrew Left publicized why he was shorting Evergrande stock, which he got banned for in 2016. I would say 2010 was when Evergrande started popping up in the news as possibly insolvent, 2000 is too early.
- thriftwy 3y ago
  What's wrong with Russian bonds? That land is unlikely to be going away, may contain even more mineral wealth and is climate change resistant.
  - dgellow 3y ago
    Aren’t bonds linked to governments, not land? Russia the country can default.
    - deleted 3y ago

MrPatan 3y ago

> any foreigner who lent Evergrande money thinking this wasn't a huge risk is a moron. Or they are very smart while investing your money. Check your country's pension fund, see who manages it and what they invest in. Or better yet, don't.

wesapien 3y ago

Nice stats but people want housing condition to improve not degenerate to other countries lows. Should we thank our western overlords for sparing us from those conditions? No.

deadfoxygrandpa 3y ago

i live in shenzhen and i would love it if prices dropped 30-40%. i'd buy an apartment immediately lol. i've been checking real estate prices every once and a while for about 5 years now ready to buy if something shows up at a good price in an area i want to live in the reality so far is that prices have pretty much stayed flat for the past 4-5 years. there hasnt been any significant fall anywhere within like 1 hour of me in shenzhen

berserk1010 3y ago
I guess you weren't looking hard enough. Pre-owned housing prices in Shenzhen fell by nearly half from their peak in 2020 after holding up over the past two years of plunging new-home values amid slumping demand and a liquidity crunch for developers. https://www.caixinglobal.com/2023-08-25/shenzhen-existing-home-prices-fall-back-to-earth-102096492.html https://www.caixinglobal.com/2023-08-25/shenzhen-existing-ho... Meanwhile, according to Leyoujia store transaction data, second-hand housing prices in Shenzhen in the fourth quarter of 2023 were around 65,000 yuan per square meter, down 12% from 2022, and 22% lower than the all-time high in the first quarter of 2021. The transaction prices in some areas and real estate have already returned to 2018, and the drop compared to the highest point was as high as 30% to 40%. https://news.futunn.com/en/post/36099590?level=1&data_ticket=1706587237241941 https://news.futunn.com/en/post/36099590?level=1&data_ticket...