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How severe is the problem? How does the housing bubble that popped in the US compare to the one in China?
by crimsonalucard 12y ago
How severe is the problem? How does the housing bubble that popped in the US compare to the one in China?
- seanmcdirmid 12y agoThe one in China is much worse, there are entire buildings sitting empty, sold to speculators, but no one living there. Even in "hot" markets like beijing, occupancy is only around 60 or so %, the rest is speculation. However a lot of property is bought with cash, or high down payments. The lack of property taxes means you can sit on the property forever as a way of saving that beats the bank, and China lacks good investment options. So this bubble could go for awhile, and it really isn't good for the economy (unused property is unused). As soon as the gov introduces a property tax, it will burst pretty quickly. So the gov doesn't do that.
- kyllo 12y agoYep, the Chinese stock market is garbage and interest rates on savings accounts are too low, so real estate is the default savings/investment vehicle for wealthy Chinese. Policy measures could change that pretty quickly. But the policymakers themselves have a lot of skin in the game.
- kyllo 12y agoThat's why it's especially scary--because of how opaque China's banking sector is, and how little we trust the numbers in their official reports, no one really knows. Some reports from earlier this year are claiming the bubble is already in the process of deflating. Perhaps we're not feeling the full knock-on effect yet. http://blogs.wsj.com/chinarealtime/2014/05/05/chinas-property-bubble-has-officially-popped-report-says/ http://blogs.wsj.com/chinarealtime/2014/05/05/chinas-propert...