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(ZH) Violence, Public Anger In China As Home Prices Slide

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Hi

OK its ZH - so the solution, as to all life's problems, is to buy gold - but an interesting article nonetheless.

https://www.zerohedge.com/news/2018-10-13/violence-public-anger-erupts-china-home-prices-slide

"Fast forward to today, when Beijing may be starting to sweat because whereas Chinese property developers usually count on September and October to be their “gold and silver” months for sales, this year has turned out to be different. As the SCMP reports, not only were sales figures grim for September, but the seven-day national holiday last week also brought at least two "fangnao" incidents – when angry, and often violent, homeowners protest against price cuts offered by developers to new buyers.

These protests are often directed at sales offices, with varying levels of intensity – from throwing rocks to holding banners and putting up funeral wreaths. The risk, of course, is that as what has gone up (wealth effect) will come down, and as home ownership has remained the most important channel of investment for urban households in China in the past decade, price cuts have become increasingly unacceptable and a cause for social unrest.

Just last week, angry homeowners who paid full price for units at the Xinzhou Mansion residential project in Shangrao attacked the Country Garden sales office in eastern Jiangxi province last week, after finding out it had offered discounts to new buyers of up to 30%.

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Communists turn against their own.

Mao Zedong killed twice as many as Stalin, and Stalin had double the body count of Hitler.

 

If it all goes pear shaped China will shut themselves off from the outside world, and being a massive bloody purge.

 

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10 minutes ago, Lord D'arcy Pew said:

If globalisation implodes we will all feel its effects.

a few people with too much money will lose some. then back to normal. 

far too much drama being sprouted. 

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8 hours ago, Captain Kirk said:

The wealth effect is such a bull$hit term. No wealth is created in the wealth effect just debt. The bursting of China's housing bubble will have wider ramifications starting with Australia.

https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/5442/calomiris nber.pdf

Quote

Once we control for the endogeneity bias resulting from the correlation between housing wealth and permanent income, we find that housing wealth has a small and insignificant effect on consumption. Additional analysis of time-series results provides further support for that view.

https://slate.com/news-and-politics/2008/06/debunking-the-wealth-effect.html

Quote

That’s not to say that a change in home equity doesn’t affect the economy. But the impact is much smaller than the headlines suggest. Last January, a report by the Congressional Budget Office estimated that when the value of a family’s house changes by $1,000, their consumption would change by somewhere between $20 and $70...

...Backus questions even the CBO’s modest estimates, calling the economic impact of the decline in housing values “too small to identify with much precision, given how many other things are going on.”

http://d.repec.org/n?u=RePEc:ecb:ecbwps:20091050&r=ure

Quote

This paper estimates the wealth effects on consumption in the euro area as a whole. I show that: (i) financial wealth effects are relatively large and statistically significant; (ii) housing wealth effects are virtually nil and not significant; 

 

Edited by BorrowToLeech

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1 hour ago, Sour Mash said:

I've posted this before but it's worth seeing for an example of the absolutely mental scale of runaway Chinese property construction:

 

 

...and they're built like shite

Are NEW Chinese buildings really FALLING DOWN?

https://www.youtube.com/watch?v=XopSDJq6w8E&t=3s

 

 

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Rioting when prices fall..??  Why no rioting and agitation against the deliberate policy of stoking unsustainable HPI...?

I wonder how this will end..it won't be pretty.

Edited by Wayward

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2 hours ago, Arpeggio said:

Just like the UK house builders and their crappy new builds. Same ponzi scheme greed, just another country.

 

Those guys on that ADVChina channel though have done a number of videos where you get an insight into the property situation. I believe it is on another level over there. They have shown the state of buildings just three years after construction and it is shocking. Nothing gets repaired, and build quality looks truly awful. I would not be surprised to see a disaster in China involving a collapsed building.

And it is worse. I am only going by their videos, but those guys have been living in China for many years each, speak the language, both married to Chinese women, and they talk about how there is actually an attitude of nobody caring, and an attitude of doing just enough, so to speak.

Additionally, nobody wants apartments that have already been lived in. If you build out the concrete shell, putting in fixtures and fittings, it reduces the value. They are kept empty and unfinished on purpose. But the value is surely going to go down anyway simply because the construction is so poor. The common areas end up being in a state of disrepair. I do not see why anyone would want to buy even the concrete shell later on when there are brand new buildings going up. So where are the price gains going to come from? Nobody regards them as actually more VALUABLE with time. They all want new new new and untouched. But they think what they buy and hold will go up in price. Mental gymnastics. They are already losing xx% with these price reductions by the builders. Nobody is going to pay these people what they paid when the builders are selling "new" for xx% less.

The government tried to cool the market by only allowing couples to buy one extra property, and people started getting divorced so they can buy more. It is a massive ponzi scheme, speculative mania.

It just feels like many of these buildings are either going to be unusable, or simply not needed. Ordinary people are going to lose a fortune. There is no way round it as the massive misallocation of resources has already occurred. And it has been happening for years. I remember Jim Chanos talking about this in 2013.

 

Jim Rogers likes to say the Chinese are the best capitalists in the world. He is talking nonsense.

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2 hours ago, Wayward said:

Rioting when prices fall..??  Why no rioting and agitation against the deliberate policy of stoking unsustainable HPI...?

I wonder how this will end..it won't be pretty.

 

I read a couple of days ago that 70% of peoples' net worth is in property in China. If that is true, that would explain it. They are all for HPI.

Edited by AdamoMucci

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8 hours ago, Sour Mash said:

I've posted this before but it's worth seeing for an example of the absolutely mental scale of runaway Chinese property construction:

 

 

 

 

Wrong video mate, that's SW8. Easy mistake to make. 😂

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9 hours ago, PeanutButter said:

Too much to hope they save money by cutting back on the rhino horn, ivory, pangolin scales, tiger penises, bear bile and various other abominable superstitious nonsense that are laying waste to the world's precious animals. 

https://countrymeters.info/en/China

Literally snake oil.

+1

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There are poor quality buildings being built now all over the world.....cheap won't be cheerful.....climate change, changing weather patterns, wind, storms, hail, wild fires, floods, quakes, not to mention poor heat insulation meaning wasting energy via walls, floors, windows, and roofs.........credit, climate, conflict.😉

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I lived in Shanghai in 2010 for 9 months.

The quality of flats to rent was appalling. It is a country a bit like the US, you have massive variation in temperature between summer and winter time. It snows in winter, and it is 35C and 90% humidity in summer.

I lived in the centre and my mates where mostly in the centre as well (ji'an to people square for those who know) which is a prime spot. With those weather condition one would expect some good insulation and proper way to heat your place. 

1) no dedicated heating only reversible AC. 

2) no insulation. You have your reversible AC on full blast in winter time to achieve 18C. 

My flat was the only one that was properly insulated, all the others were a nightmare to visit.

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13 hours ago, PeanutButter said:

Too much to hope they save money by cutting back on the rhino horn, ivory, pangolin scales, tiger penises, bear bile and various other abominable superstitious nonsense that are laying waste to the world's precious animals. 

https://countrymeters.info/en/China

+1...strange you never hear much about meaningful campaigning against these practices...wonder why that is?

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I remember seeing an exhibition in Manchester that was about housing/social changes in China. I'm guessing it was about 8-10 years ago, a lot of it focused on the people who lived in traditional self built housing on the river bank (or on the water) that were being forced out, and pushed towards living in small apartments in the City. The river bank homes were declared 'unsafe' and torn down, and I think possibly set on fire if people refused to leave. They had scale models of the apartment blocks being built, detailing the tiny rooms they would end up living in. Rural communities/farmers put out of business and forced to move the city to work in factories and rent small apartments - just awful.

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https://www.dailymail.co.uk/news/article-2236746/Road-built-building-couple-refuse-China.html

i like the comments. 

 

"Good for them, they are lucky not to have compulsory purchasing powers like here which force people to give up their own property."

"The communists are not so bad after all. In the UK there'd be a compulsory purchase of the property, no arguing!"

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2 hours ago, longgone said:

https://www.dailymail.co.uk/news/article-2236746/Road-built-building-couple-refuse-China.html

i like the comments. 

 

"Good for them, they are lucky not to have compulsory purchasing powers like here which force people to give up their own property."

"The communists are not so bad after all. In the UK there'd be a compulsory purchase of the property, no arguing!"

 

I wonder if those people still think it was worth staying. Some of those places are clearly worthless now anyway, and must be absolutely horrible to live in. What a hollow victory. That is the power of the state.

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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