China Has Been Covertly Funding A Housing Bubble Five Times Larger Than That Of The Us

[Confounded]

China Has Been Covertly Funding A Housing Bubble Five Times Larger Than That Of The US: 65 Million Vacant Homes Uncovered

China just announced that its Q2 GDP came in at 10.3%, just below a consensus estimate of 10.5%. Surprisingly, for some odd reason the market seems to believe this "data." Although in retrospect, based on China's bottom up GDP goalseeking, the number, which we will show in a second is completely irrelevant, could very easily be true, based on two just announced stunners about the Chinese economy. The first comes from Fitch, which in a report released today titled Informal Securitisation Increasingly Distorting Credit Data, uncovers that China has in fact been massively underrepresenting the actual amount of new loans in the first half of 2010, courtesy of precisely the kinds of securitization deals that blew up half of our own banking system: "Adjusted for informal securitisation activity, Fitch estimates that the net amount of new CNY loans extended in H110 was closer to CNY5.9trn, or 28% above the official figure of CNY4.6trn...on a flow basis the volume of credit being shifted off balance sheets in recent times has been large and rising. Activity also is largely concentrated among just a few dozen banks, and institution?specific exposure is often much higher." And some are wondering why China's AgBank was scrambling to raise $20 billion via a hurried IPO... Yet this data pales in comparison with disclosure from a recent article in South China Morning Post, in which an economist at the Chinese Academy of Social Sciences noted estimates from electricity meter readings that there are about 64.5 million empty apartments and houses in urban areas of the country! This number is five times larger than the roughly 12 million in total US public (3.89 million) and shadow (8 million as estimated by Morgan Stanley) home inventory available currently. Forget Stephen Roach - China is covertly funding and creating a housing bubble that is at least 5 times as big as that of the United States. We leave it up to you to imagine the consequences of that particular bubble's bursting...

More here

http://www.zerohedge.com/article/china-has-been-covertly-funding-housing-bubble-five-times-larger-us-65-million-vacant-homes-

[lowrentyieldmakessense(honest!)]

potemkin

[Deckard]

The dinosaurs were wiped out by an asteroid from outer space.

Will the human race be wiped out by... houses?

Rather less spectacular, don't you agree? Talk about going out with a whimper

[soldintime]

potemkin

I read the zerohedge report. What I liked was the Fitch report about China that was included. China is the market where credit is still growing and keeping the gloabl economy growing. Once China has hit its limits can we than expect the massive global deflation debt spiral to start.

Edited July 15, 2010 by soldintime

[Gone baby gone]

China's not a bubble - oh no.

Everything China reports must be true - oh yes, of course.

China is the future.

[Minos]

China's not a bubble - oh no.

Everything China reports must be true - oh yes, of course.

China is the future.

Are 65M empty houses really that big a problem in a population of over a billion. They'll fill 'em up eventually.

[okaycuckoo]

Are 65M empty houses really that big a problem in a population of over a billion. They'll fill 'em up eventually.

Or tear them down.

[Gone baby gone]

Are 65M empty houses really that big a problem in a population of over a billion. They'll fill 'em up eventually.

If they paid the workers enough to buy one. But they don't.

But don't worry, China is not an unsustainable bubble economy, far from it. And trees really do grow to the sky.

[RufflesTheGuineaPig]

Are 65M empty houses really that big a problem in a population of over a billion. They'll fill 'em up eventually.

I'm not maths teacher, but while it's more empty houses per-person than in th UK, aren't we supposed have a massive shortage.

2m in the UK for 62m people = 1 for each 31 people.

65m in china for 1338m people = 1 for each 20.5 people.

[interestrateripoff]

but not with people able to service the interest bill

What they need is people to lie and get ever larger mortgages ensuring prices always go up it's full proof.

[Timm]

I'm not maths teacher, but while it's more empty houses per-person than in th UK, aren't we supposed have a massive shortage.

2m in the UK for 62m people = 1 for each 31 people.

65m in china for 1338m people = 1 for each 20.5 people.

The 64.5 million is from urban areas I think, so equates to more like 1 for each 41 city dwellers.

[fluffy666]

If they paid the workers enough to buy one. But they don't.

But don't worry, China is not an unsustainable bubble economy, far from it. And trees really do grow to the sky.

Paying workers a fair share of value added so that they can afford to buy the products that they make? That'd make you a lousy communist like that Henry Ford bloke.. and they don't have those in China, do they?

[Confounded]

I'm no maths teacher, but while it's more empty houses per-person than in the UK, aren't we supposed have a massive CHRONIC shortage.

2m in the UK for 62m people = 1 for each 31 people.

65m in china for 1338m people = 1 for each 20.5 people.

You also would not make a very good BBC news presenter, you need turn the subject into something people should fear.

The shortage propaganda has been a very effective part of the recent bounce and pushed weekly on the BBC. If the banks ever start repossessing again the fear phase will coincide with the realisation that there is no shortage, other than of people able to pay current prices.

[AvidFan]

Do I have permission to say "I told you so" seeing as how I was posting stuff from Chanos over a year ago?

Thanks.

[RufflesTheGuineaPig]

Do I have permission to say "I told you so" seeing as how I was posting stuff from Chanos over a year ago?

Sorry, no, but you are allowed to grin smugly, as long as no-one is looking.

[erranta]

We read about this yonks ago - its a cultcha thang too.

They buy investment places then leave them empty so they can sell them on 'as new'

The last time we had a thread, buying a place was measured at 13x some type of wage - maybe city office worker.

[D.C.]

The 64.5 million is from urban areas I think, so equates to more like 1 for each 41 city dwellers.

Your numbers seem to be going in the wrong direction.

If you cut out the majority of people in China that live in rural areas, your ratio should not become more diluted, maybe you have a BBC career ahead of you yet..

[Confounded]

http://www.zerohedge.com/article/next-chinas-property-bubble-step-function-explosion-vacant-inland-cities

China Takes The Property Bubble To A Whole New Level: An Explosion Of (Vacant) Inland Cities Is Coming

Submitted by Tyler Durden on 08/09/2010 14:38 -0500

As if documentary material of what happens when China builds one ultramodern city in the middle of nowhere (hint: it exists in a ghastly void, where it remains completely empty - but that's ok: at least it kept a few million Chinese construction workers employed and "boosted" the country's GDP courtesy of another trillion in underwater loans) was not sufficient, Reuters has prepared an exhaustive special report on how China plans to move forward with the next leg of its housing market titled: "China bets future on inland cities." It is a stunner, and it demonstrates that far from tackling its housing bubble, which as we disclosed previously has already resulted in about 65 million vacant homes, is pushing on blindly without regard for the consequences, and is on the verge of taking bubble mania to a whole new, previously unseen level.

[interestrateripoff]

Aren't these state run enterprises running up the bubble to help fund local state spending?

Still I'm sure it's contained.