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Panic on the streets of Beijing ♪♫♬

http://uk.reuters.com/article/2014/09/23/uk-china-economy-property-idUKKCN0HI1L320140923

(Reuters) - Chinese banks, property developers and regional governments are intensifying efforts to drag the housing market from its worst slump in two years by allowing people to buy more than one home, slashing prices and launching unorthodox promotions.

The property sector, which accounts for about 15 percent of China's economy and directly affects some 40 industries from furniture to steel, is of increasing concern to companies and policy makers as it drags on growth.

The most powerful support measure may be yet to come.

Chinese media said on Tuesday that one of China's top four state banks planned to discount mortgage rates by 30 percent and relax lending rules for those buying a second home.

Whether the flurry of measures can stoke growth in a sector that is crucial to the world's second largest economy remains to be seen.

Even in central Beijing, one of the few cities left in China where home purchase restrictions are still in place due to record-high prices, the sector is feeling the pinch.

Lu Yanzeng, a property agent, said he had not sold a single home in two months. Business this year "is very so-so, it's not as good as last year," he said. "Sales of second-hand homes are slow, but new home sales are brisk."

China's property market, where prices surged to all-time highs for five consecutive years, is experiencing its sharpest slowdown in around two years.

Average new home prices fell for a fourth consecutive month in August by 1.1 percent, meaning the market is now close to wiping out gains seen over the last year. Compared to a year ago, sales as measured by floor space were down 12.4 percent.

While the slowdown in a heated market has benefited millions of Chinese, for whom soaring house prices have made home ownership a distant dream, slackening activity has also raised concerns about the health of China's economy. (Sound familiar ?)

It is straining already softening domestic demand and pushing overall fixed-asset investment to lows not seen in nearly 14 years on a cumulative basis between January to August.

Falling home prices are also fuelling credit risks.

State news agency Xinhua said on Sunday that 32 small property developers in the city of Handan in north China have defaulted on loans that were borrowed illegally from an underground market.

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Chinas cities suffers the same self inflicted pain points as London. Thousands of luxury developments, that no one can afford to live in, so they sit there as empty assets to stash someones cash into.

The problem with this is that asset can drop much the same as any other, as it only has a percieved value. When a house is a home its a different story, the place has far more value and so its inhabitants will not be so easily swayed by price flucations, as its not an asset in a portfolio, but is instead someone that becomes a central aspect of a families entire life...it's a home.

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Jeez, Johnny Marr looks like a second year schoolboy there, can`t remember them ever looking that young.

Yes, and Morrissey looks disturbingly like Will Young (lovechild?!)

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The article is from Reuters. It wasn't long ago when the only articles like this were from Zerohedge or Infowars.

I think the seriosity of the China housing bubble collapse is under reported and will creep up on the west very quickly.

Basically China is at a crossroad where building more and manufacturing on the cheap isn't going to create wealth and jobs.

It's a bit scary really, I mean what is their next move? Interest rates are 6%, but you can see from the west that lowering that to 0% isn't going to help their economy.

Maybe there will be some riots and and some revolution.

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"Sales of second-hand homes are slow, but new home sales are brisk."

In a country with thousands of earthquakes per year, where most houses are made from wood? Well there's a surprise.

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So we have gone from 'decoupling' to 'soft landing' and now they can't even see the bloody airport? :lol:

You have to love financial 'experts'- they do not have a clue and somehow manage to make a good living from it.

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Yes, and Morrissey looks disturbingly like Will Young (lovechild?!)

Possible. Morrissey used the cup of tea better than sex line didn`t he, in the 80`s? Watching the Young Guns Go for It episode on Culture Club that was the line Boy George used, while pretending to the public to be some sexless panto figure, of course he was having a very passionate affair with the drummer, which inspired most of the lyrics. I always wanted Morrissey and Cliff Richard to be banging lots of hot young chicks on the sly, while pretending to be something else.

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The Chinese government needs consumers to assume new debt or their new money will not be absorbed fast enough to stifle inflation. Just like here.

We destroy pensioners' savings so they get into BTL, I wonder how the Chinese will force more into debt? I await a more totalitarian solution.

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