thanks. are these comments below true on China (and Hong Kong)? if so, then this will lessen real estate loan risk to Chinese banks.
in regard to your upstairs neighbor, does he own his unit outright without loan. also, in China (and Hong Kong), what are property taxes relative to FMV of property (low as I recollect). do property taxes change if unit is rented? thanks for any comments. just trying to figure out the Chinese real estate market...
__________________
Unlike in the US where the real estate developer or buyer needs only zero% deposit or 10% deposit only, in China, bank would only lend money for the construction part of the project, but not the land part. Thus typically, banks would only lend at most 50% for the project. If market prices falls by 40%, the entreprenuer will have 10% equity left, and the bank is safe. Only when the value falls by more than 50% will it start to become a non performing loan!
For real estates to turn into NPL, at the developer's level, prices will have to fall by about 50% before the banks get burned. For the home buyer's level, prices have to fall by 30% before the banks get burned.
In China, you cannot use your real estate as a collateral to borrow money for consumption etc. The overall lending system in China is much safer than many other parts in the world. |
