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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 375.93

-1.8%

Nov 14 4:00 PM EST

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To: TobagoJack who wrote (55421)	9/24/2009 12:55:37 AM
From: Amark$p	Read Replies (1) of 217808

Why do Chinese like real estate so much? My view is there is an unusual cultural affinity for real estate ownership in China. Aside from that however, if your interest rate on your savings account is 2% or less, then real estate can look pretty attractive in comparison. That’s why you end up with so many sold and unoccupied units on the outskirts of cities in China. The “Well, we might as well buy an apartment instead of leaving it in the bank” thought process is probably pretty common in China. rgemonitor.com ftalphaville.ft.com So keeping interest rates low enforces the property market in two ways: by making mortgages cheap, and by increasing the incentive for households to move their savings into real estate. Considering how many unoccupied units we see in China, it’s certainly remarkable that the secondary residential property market is as miniscule as it is. This all tells us that Chinese homeowners’ holding power is extraordinarily high. So in shorting Chinese real estate we’re competing against 1) the buyers drying up and 2) Chinese holding power staying strong. That’s kind of an ugly thing to bet against. The fundamentals could stay insane for quite a while longer? What makes the buyers dry up?

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