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Politics : Formerly About Advanced Micro Devices
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To: tejek who wrote (564507)5/4/2010 3:42:45 PM
From: i-node1 Recommendation  Read Replies (1) of 1577343
 
The gov't isn't propping it up......in fact, they are trying to take some of the air out. They just increased reserve requirements again this past weekend. But even if they didn't, you are approaching the Chinese real estate market like its the US and it ain't. Our price bubbles blow up because there is only a limited number of houses that can be sold before the market is saturated.....and that's because homeownership is around 70% in the US market. Homeownership is well below that percentage in China......and the demand is growing as people's incomes improve. Plus, you have a gov't that can do whatever it wants any time it wants. They don't have to follow any pre-arranged rules like in the US.


The problem isn't your run-of-the-mill housing. The problem is in apartment buildings (what we would call condos) where people are buying them solely for the potential appreciation with no renters in sight. In fact, they don't even finish them out -- they're empty $150,000-200,000 shells, that few people in China can afford.

You're right that the government is trying to reel it in a bit, and they may be able to delay it but the crash is coming and it will be ugly.

But when you get people buying property, not for any intrinsic worth, but for the potential appreciation -- and leveraging the purchase money, that is a textbook bubble and it will collapse.
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