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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (49199)	1/9/2006 4:05:31 AM
From: mishedlo	Respond to of 110194

Only 10% they must be in a recession. I assumed 16% a year for 1000% years. What went wrong? MIsh

To: GST who wrote (49199)	1/9/2006 8:59:44 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

Sunday, January 08, 2006 Housing Bubble A 'Bitter Pill' For Shanghai thehousingbubble2.blogspot.com Some reports from China. "China's most expensive property market has been deflating since June, when new taxes aimed at speculators halted a six-year boom during which prices had almost tripled. The slide may deepen as developers increase supply and demand wanes in a city where a typical new apartment costs more than 50 times the average annual income." "'Property prices in Shanghai have risen out of the reach of ordinary citizens,' said Qiu Zhicheng, an analyst who forecast prices will drop 10% in the coming year. 'It was only a matter of time until prices fell.'" "Home prices dropped by 7.9% between June and October. The index more than doubled between December 1999 and May 2005. The steepest declines since then have come at new apartment projects, as developers try to raise cash to meet year-end bills and finance new developments. 'Developers need to pay construction contractors at the year-end and balance their books,' said Chen Sheng. 'That's triggered a selling spree.'" "'We had to cut prices in order to sell the remaining stock,' said Qian Zheng, sales manager at Baoland East Garden, which is asking an average of 9,300 yuan per square meter, down from 13,000 yuan at the peak last year. 'We need the cash for the development of another project.' A high-end project in the city's Lujiazui financial district reduced asking prices to 26,000 yuan per square meter from a peak of 36,000 yuan in March." "The current buyers' market is quite a turnaround from the pre-June boom, when would-be buyers sometimes had to wait in line for days to register for popular developments. Darkened windows became a common feature of the nighttime cityscape, as developers and speculators stockpiled vacant apartments in anticipation of further price increases. "Shanghai's housing slump is only going to worsen and imperil a significant part of the Chinese economy, says Andy Xie, Morgan Stanley's chief Asia economist in Hong Kong. 'They'll remain empty for years,' Xie said, adding that a jolting comedown also was in store for other Chinese cities with building booms." "In Shanghai, people blame the popping of the housing bubble on the central government, which has applied one measure after another in the last year to quash excessive speculation and price increases. 'It's killed the speculators,' said David Pitcher, a Shanghai developer." "Few analysts are betting on a quick turnaround. Yin Zhongli, an economist in Beijing, says a housing crash takes time to clean up. He worries that the financial sector will be crippled by the real estate fallout. Last year, he said, 76% of all bank loans in Shanghai were in real estate. 'Now is the time to swallow a bitter pill,' Yin said." "That's what Huang Xiaolei is doing. The 25-year-old Shanghai native nabbed a 1,700-square-foot apartment during the heady times last spring. The unit wouldn't be completed until the end of the year, but as is customary in China, Huang had to secure a loan and make the down payment right away. She and her parents pooled their life savings of about $80,000 and put 30% down on the $270,000 home. In April, they began making monthly mortgage payments of $1,100 on a 30-year loan with a 5.5% interest rate." "In November, Huang decided to stop the monthly payment, and this month she filed a lawsuit, claiming her contract allowed her to rescind the purchase before the house was completed under special circumstances, with a 3% fee. 'We have over 40 cases like this at our firm,' said Du Yuping, Huang's lawyer. Huang regrets that she got caught up in the frenzied market, and says that even if she wins the lawsuit, she'll suffer a hard financial loss. 'I was cheated,' she said."