pldragon

In China Housing Is Still Up, but Rationing Is Spreading

Hi Michael...
About the real estate sector, there is another interesting article on chinastakes.com entitled " Chinese Developers Lobby the Government to “Save the Housing Market”
www.chinastakes.com/st...

Of course , 2 of the China biggest developers preach for their parish, asking for loosening rules.
The writer points correctly to the fact that the Chinese government is torn between its tightened policy since last year (increase of loan limits, specially from the second purchase of property..etc...) and its fear that all banks will be saddled with inextricable defaults problems if suddenly the houses drop everywhere as it was the case in Shenzhen...
On the other hand, one could argue that if prices were more in phase with avarage incomes, there would be more buyers than investors, but there would be buyers nevertheless

in the same website, I read again another great article written after the Sichuan earthquake, which relies more on psychology...
Since landlords own only the buildings in China, and never the land, and since no any domestic insurance company accepts to insure any damage against earthquakes, people have suddenly come to realize that real estate investment is not rock-solid (no pun intended).... and then , it is probably one of the reasons why people now delay purchases.
www.chinastakes.com/st...

Between 2 evils, which one the Chinese government will prioritize?? Probably same logic as developed in your explanation today about inflation and slow economy.... But then, why did they let the SSE plunge 50% ??