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China’s tier one city property price stable?

1)The NPL ratio of commercial banks in China was 2.04% at end-1Q09, down 0.38ppt QoQ, CBRC said. Outstanding NPLs stood at RMB549.5bn, down RMB10.8bn QoQ. Coverage ratio for NPLs reached 123.9%, up 7.5ppt QoQ.

 

2)Beijing city saw secondary market boom during Mar 21-30: average selling price +5.0% vs. Mar 11-20, sales volume +44.5%. 2) Shanghai: Huayan, a local agent, reported that Shanghai now saw 5.9mn sqm inventory of commercial real estate, roughly 42X of March sales.

 

This caught many people off guard, temporary as it is, the property market really, I mean really kidnapped the banks, front load the mortgages to banks balance sheet, that’s why the rosy picture goes hand in hand with the two sectors. I’m starting to adjust my assessments in China property market, forget the affordability test of the 20x residential annual income per apartment, like fundamentals coming back to reality eventually, but that really takes time. We may not see some Serious property price adjustments in First tier cities for another year or two. The banks and developers as buddies, go hand in hand and have this love affair will eventually eat into Chinese economy. Why? Take a look what’s the pillar industry in US, technology, financial, military equipment, Hollywood. Then China, in here? Housing! But the second tier cities, they really have no buffer.