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85Pc Of Urban Chinese Cannot Afford To Buy A Home As Inflation Accelerates

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http://www.telegraph.co.uk/finance/china-business/8195879/85pc-of-urban-Chinese-cannot-afford-to-buy-a-home-as-inflation-accelerates.html

China's property bubble has grown so huge that 85pc of Chinese living in cities can no longer afford to buy a home, according to an influential Chinese government think tank.

The Chinese Academy of Social Sciences (CASS) said in its annual Economic Blue Paper that a typical Chinese property now costs 8.8 years of average earnings.

In addition, CASS said that house prices are still rising far in excess of wages, putting property more and more beyond the reach of average Chinese.

CASS estimated that Chinese property prices had risen by 15pc this year, although the rises in some cities have been far steeper.

By contrast, the UK's typical house costs five years of wages to buy, according to the Nationwide Building Society, and the UK's long-term average is four years of earnings.

"House prices have risen steadily for years," said Zhou Linhua, the co-author of the CASS report. "This has inflated investor expectations of a high return, which has brought more money flooding into the market, and fed the bubble."

So how will the Chinese bubble correct via increase in wages or value crash?

Still as we know property values can only ever go up and I'm sure Chinese banks aren't vulnerable to property prices crashing, it's not like the elites will have been building up vast property empires that only happens in the UK.

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Another capitalist economic miracle where the 1% of the population buy up everything and then rent it to the other 99%.

Just as Chairman Mao wanted.

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Sigh not again...

There are HUGE differences in UK and Chinese culture, many of the Urban Chinese are migrant workers who go to cities work for a few years to save up and bring it back to their home towns and villages. They are like Poles who come to the UK to work. While what they earn in the cities is insignificant they take it back home and build homes or businesses.

Many of the workers live in company provided dorms and the intergenerational family home is pretty common, even in modernised cities like HK 3 generations under one roof is not that uncommon.

So while the ologiarch middle classes may get destroyed about 200 million of them, the working man, although generally indentured to hell will see very little effect! There are also alternatives to the UK way of doing things, in the UK we have people monopolising assets and telling the young uns hahaha you gotta pay me rent. But again they live with families (note one child rule means less crowded homes).

Also beijing and many cities in China have box homes. Sort of like HK cage homes but made with plyboard, they are 4ft by 2ft places to sleep,

http://www.businessinsider.com/beijing-entrepreneurs-are-dividing-single-apartments-into-tiny-pods-2010-4

Look at the rent 250RMB per month! thats 7% of their pay cheque. In the UK this would be somewhere like 40-60%

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By contrast, the UK's typical house costs five years of wages to buy, according to the Nationwide Building Society, and the UK's long-term average is four years of earnings.

@IRRO

Article you posted is absolute horse sh1t.

From beeb: Average national house price $£246,387

From UK stats site: Average wage £25,000 (very iffy)

That makes about 10x salary.

Get your numbers right and use your head before posting for fvcks sake.

EDIT: beeb link http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm

Edited by cashinmattress

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@IRRO

Article you posted is absolute horse sh1t.

From beeb: Average national house price $246,387

From UK stats site: Average wage £25,000

That makes about 10x salary.

Get your numbers right and use your head before posting for fvcks sake.

Nah the UK media is more like £19000.

Since that is GROSS and net is about £15172 its more like 17 times. (Gross is pointless since if X is taken as tax then its not your take home pay!

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Nah the UK media is more like £19000.

Since that is GROSS and net is about £15172 its more like 17 times. (Gross is pointless since if X is taken as tax then its not your take home pay!

Yep, whatever.

Point was that pointing the fingers at the Chinese ain't solving the problems here.

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http://uk.finance.yahoo.com/news/85pc-urban-Chinese-afford-buy-tele-2845629297.html?x=0

Ding Dong, Meri Lee, Ohn Hi , 9:07, Saturday 11 December 2010
China's property bubble has grown so huge that 85pc of Chinese living in cities can no longer afford to buy a home, according to an influential Chinese government think tank.
The Chinese Academy of Social Sciences (CASS) said in its annual Economic Blue Paper that a typical Chinese property now costs 8.8 years of average earnings.
In addition, CASS said that house prices are still rising far in excess of wages, putting property more and more beyond the reach of average Chinese.
CASS estimated that Chinese property prices had risen by 15pc this year, although the rises in some cities have been far steeper.
By contrast, the UK's typical house costs five years of wages to buy, according to the Nationwide Building Society, and the UK's long-term average is four years of earnings...../
According to its figures, new homes in seven out of the 35 cities were more than 50pc over their fair value. Property prices in Fuzhou are 70pc too expensive, while those in Hangzhou are 66pc overpriced. New homes in Shanghai are 37pc overpriced and those in Beijing are almost 50pc overpriced.

85% would represent quite a few milion to support a Mao type. Perhaps the traditional "Mandate of Heaven" is about to kick in again.

Poor sods over there having to endure the same pain as our poor sods. The only difference may be that the Chinese might do something about their plight whereas we can only vent on HPC.co.uk.

Edited by Realistbear

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@IRRO

Article you posted is absolute horse sh1t.

From beeb: Average national house price $246,387

From UK stats site: Average wage £25,000

That makes about 10x salary.

Get your numbers right and use your head before posting for fvcks sake.

So we are going to discuss the facts, excellent.

http://www.housepricecrash.co.uk/indices-nationwide-national.php

Nov 10 Average House Price = £163,398

So from HPC which I think might be a reliable source of information we have the avg house price from the Nationwide as £163k, please note I'm quoting in sterling rather than dollars.

Now if you divide this figure £163,398 by £25000 you get 6.53592 which roughly translates to 6.5 years pay not 10x as you helpfully stated, although you do appear to have made the mistake of quoting a price in dollars and then doing the wages in sterling.

Now it could be that the people who've come up with the stats are actually quoting joint incomes for the UK to get our figure lower, in China are households more likely to be single wage earners?

Still I'm unsure why commenting on UK earnings in relation to a potential bubble in China is helpful.

When I highlighted the nationwide figure it seem odd, which is why I did it so we could hopefully discuss that issue in a constructive manner.

german-beer.jpg

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I assume China is like SE Asia and that stats like this are completely meaningless. Around Bangkok there are some modern housing estates that cater only to managers in large companies usually multi nationals. 95% of the population either rents, affordably, in a concrete block or if more lucky has some land in the family on which they can build their own modest home for the equivalent of a few thousand pounds.

So only a tiny fraction of the dwellings are in the housing "market" and they are primarily a status symbol rather than a residence.

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Looking at Thailand s overall house price performance over the last five years I would say that they are well overdue for a growth spurt. If anyone was that way inclined now would be a good time to get in.

Been buying land to add to the wife's for the last 12 years at an average cost of less than a thousand pounds an acre. Extended the house, well actually practically rebuilt it, to over 2,000 square foot for less than £10k. Built a small bungalow, with no mod cons, for her old man for less than £1k. No way am I getting into the lifestyles of the corrupt and vain and spunking £100K+ on an executive home even if they do have armed guards at the entrance to the estate.

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That’s interesting I take it that your wife is a Thai national. What percentage of equity do you think you have created on that development. The numbers look low risk to me but it’s all relative I guess. Do you know any of the other posters that have gaffs in Thailand and do you think that city house prices will start to grow again ?

Our place is in the sticks in northern Thailand and apparently the potential buyers would be interested in only the agricultural yield of the land and the house is of no value at all in a market sense. Regardless I find it a fantastic place to spend a month each year which is nearly twice the size of my London house. With the tiny amounts I have put into it I don't care at all about the so-called equity in it.

I lived for a year in Chiang Mai during the Asian crisis '97-'98 and even then condo prices (the only thing that foreigners can own without recourse to dodgy legal arrangements) were astronomical compared to the rents.

I have in-laws in Bangkok who have their own land so have just built their own nice houses for dirt cheap and have no interest in the official housing market but a quick scan of the papers when I was there in August leads me to believe that rental yields are still miniscule. My first post on this thread was that these properties are more for vanity than anything else. Considering the huge wealth disparity, the top 5% in Thailand are very rich and can push house prices up to western levels. Unlike the west, though, this doesn't affect the average Thai in anyway.

If you want to play the market there then try the condos in the beach resorts. Apparently they are a bit volatile, but that is only good news to a speculator.

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Problem with Thailand for UK investors is the collapse of the Pound to the Baht, eye watering.

It can quickly go the other way. I first arrived in summer of 97 and it was 39 baht to the pound. A few months later it was 90 and I found myself owner of a bar and was throwing the worthless baht around like confetti.

Miracle I even survived that year.

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It can quickly go the other way. I first arrived in summer of 97 and it was 39 baht to the pound. A few months later it was 90 and I found myself owner of a bar and was throwing the worthless baht around like confetti.

Miracle I even survived that year.

But the boot is on the other foot now.

I would have loved to have found the place in 97, have heard many stories while sat at a bar.

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But the boot is on the other foot now.

I would have loved to have found the place in 97, have heard many stories while sat at a bar.

Yeah just like I heard the stories about the guys who were there in the 80s. The lands of opportunity (and I mean that in a very broad sense) are all slipping away.

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I thought that it was more of a lifestyle investment than economic one. Sounds good I have been up that neck of the woods Chang Mai, Chang Rai and used to go into Burma overland on motorbikes. I hive no interest in buying up there but seen the relative price anomaly with their Asian peers

Also lived in Jakarta during the Asian crisis and when Suharto fell. I was paid in US $ and buying power increases 12 fold. I filled two 20 foot shipping containers with real Dutch influenced Javanese antiques. They were great days very exciting times indeed. Banks rates were 75%.

Yes the bar scene I know that as well including the islands, I don’t think I would have survived owning one judging by the war wounds I received just visiting them.

Funny that, I was in Sumatra having just visited the orangutans at Bukit Lawang when Suharto was ousted. Made my way to Lake Toba unaware and proceeded to wipe out on my rented motorcycle. Had some minor damage to my arm, but the bike was wrecked and the owner looked like he would beat, or more likely gouge with a kris, the repair money out of me. Of course by then the banking network was shut down due to the revolution and I was staring at white slavery. Fortunately I met these Chinese restaurant owners who were in hiding and they took my credit card details and gave me several hundred dollars worth of rupiah so I could pay for the bike and make a quick exit via Medan to Malaysia. A few months later the bill came through on my card and the Chinese couple only took 8% on top of what they gave me. I have had a soft spot for the Chinese ever since.

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Guest The Relaxation Suite

http://uk.finance.yahoo.com/news/85pc-urban-Chinese-afford-buy-tele-2845629297.html?x=0

Ding Dong, Meri Lee, Ohn Hi , 9:07, Saturday 11 December 2010
China's property bubble has grown so huge that 85pc of Chinese living in cities can no longer afford to buy a home, according to an influential Chinese government think tank.
The Chinese Academy of Social Sciences (CASS) said in its annual Economic Blue Paper that a typical Chinese property now costs 8.8 years of average earnings.
In addition, CASS said that house prices are still rising far in excess of wages, putting property more and more beyond the reach of average Chinese.
CASS estimated that Chinese property prices had risen by 15pc this year, although the rises in some cities have been far steeper.
By contrast, the UK's typical house costs five years of wages to buy, according to the Nationwide Building Society, and the UK's long-term average is four years of earnings...../
According to its figures, new homes in seven out of the 35 cities were more than 50pc over their fair value. Property prices in Fuzhou are 70pc too expensive, while those in Hangzhou are 66pc overpriced. New homes in Shanghai are 37pc overpriced and those in Beijing are almost 50pc overpriced.

85% would represent quite a few milion to support a Mao type. Perhaps the traditional "Mandate of Heaven" is about to kick in again.

Poor sods over there having to endure the same pain as our poor sods. The only difference may be that the Chinese might do something about their plight whereas we can only vent on HPC.co.uk.

The concern about China is not communism but its growing nationalism. The two forces have been very antagonistic in China for a long time, but nationalism is the more dangerous of the two. Combine this with a rapidly expanding military, stir in some hyperinflation, add a couple of leaps in unemployment, and finally add some American economic collapse and you have a beautiful dish of World War III, which should last for three to five years if stored at the correct temperature. Don't forget to take some Rennies.

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Funny that, I was in Sumatra having just visited the orangutans at Bukit Lawang when Suharto was ousted. Made my way to Lake Toba unaware and proceeded to wipe out on my rented motorcycle. Had some minor damage to my arm, but the bike was wrecked and the owner looked like he would beat, or more likely gouge with a kris, the repair money out of me. Of course by then the banking network was shut down due to the revolution and I was staring at white slavery. Fortunately I met these Chinese restaurant owners who were in hiding and they took my credit card details and gave me several hundred dollars worth of rupiah so I could pay for the bike and make a quick exit via Medan to Malaysia. A few months later the bill came through on my card and the Chinese couple only took 8% on top of what they gave me. I have had a soft spot for the Chinese ever since.

Went to both of those a couple of yrs ago, loved them both, fantastic holiday, also seeing daughter working in Aceh at the time. Sabang island just of Aceh also fantastic - brilliant diving etc. and dirt cheap.

Mr B was in Jakarta when Suharto was ousted - landed just as it was all kicking off - had to chuck money out of taxi windows at raodblocks. Later watched it all from 19th floor of Hilton apartment.

About a yr later we took a trip to Sulawesi - stayed in a lovely hotel right on N tip (Paradise Resort I think) - currency was still collapsed, it was about ten quid a night. We were about the only guests - I felt so sorry for the staff.

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Went to both of those a couple of yrs ago, loved them both, fantastic holiday, also seeing daughter working in Aceh at the time. Sabang island just of Aceh also fantastic - brilliant diving etc. and dirt cheap.

Mr B was in Jakarta when Suharto was ousted - landed just as it was all kicking off - had to chuck money out of taxi windows at raodblocks. Later watched it all from 19th floor of Hilton apartment.

About a yr later we took a trip to Sulawesi - stayed in a lovely hotel right on N tip (Paradise Resort I think) - currency was still collapsed, it was about ten quid a night. We were about the only guests - I felt so sorry for the staff.

Haven't made it to Sulawesi yet, but is on my list. Too bad the visas are only for 60 days as I want to spend months wandering east of Bali until I can get to Irian Jaya and hang out with the former headhunters in the interior.

Before I spilled the bike, I was paying less than a pound a night for a place right on Lake Toba after the rupiah collapsed. Nothing special in those days but I had a real shower with hot water rather than a mandi. I heard even places at Kuta Beach on Bali where going for a couple of quid a night.

Aceh is a strange place what with the Muslim fundamentalists in the city itself and the laid back traveller islands offshore. A good friend of mine, photographer, went back early 2005 after the tsunami and was heartbroken.

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http://uk.finance.yahoo.com/news/85pc-urban-Chinese-afford-buy-tele-2845629297.html?x=0

Ding Dong, Meri Lee, Ohn Hi , 9:07, Saturday 11 December 2010

China's property bubble has grown so huge that 85pc of Chinese living....

<snip>

:)

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The concern about China is not communism but its growing nationalism. The two forces have been very antagonistic in China for a long time, but nationalism is the more dangerous of the two. Combine this with a rapidly expanding military, stir in some hyperinflation, add a couple of leaps in unemployment, and finally add some American economic collapse and you have a beautiful dish of World War III, which should last for three to five years if stored at the correct temperature. Don't forget to take some Rennies.

You think a war would last that long if they start throwing nuclear devices around?

Or do you think that like the WWII when both sides didn't use chemical weapons, the military elites will simply not use them?

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You think a war would last that long if they start throwing nuclear devices around?

Or do you think that like the WWII when both sides didn't use chemical weapons, the military elites will simply not use them?

It'll be a proxy gentlemans war... i.e. there will be an agreement between the allied powers and the enemy powers to fight a large scale proxy war in an incredibly wasteful manner somewhere like North Korea or something. Maybe Taiwan.

Today we have two proxy wars going on already, the weapons you find in Iraq and Afghanistan come from the enemy powers.

At the end of it 1.2billion Chinese are dead 125million Russians are dead. 325million Americans are dead 735 million Europeans are dead. 121 Japanese are dead. 1bn Indians will be dead.

At which the only ones left will be the elites and their direct servants, who will have automated factories to do everythng for them.

WWI infantry rushes will be utilised to maximise casulties by prior agreement. If they refuse WWII infantry rushes 1 rifle ten men and a machine gun behind the infantry rush will be used. Battlefield WMD will be allowed again to maximise casulties. The sea around Korea turns red with the blood shed.

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