Saturday, July 17, 2010

Why don’t they buy in London too?

China's latest export: home buyers

Half a world away, a handful of Chinese citizens are feverishly planning a Canadian real-estate shopping excursion. Each of them expect to drop at least a half-million dollars on downtown condos during their 10-day visit. “With the rising risk of the bubble bursting in the Chinese real estate market, there is a demand for overseas real estate for diversification, safety and relatively high rental yield.” “The purpose for this trip is to find good deals for immigrants and investors. We do not intend to bring speculators to Canada." Most foreign investors make the purchase sight unseen.

Posted by drewster @ 09:39 AM (1565 views)
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10 thoughts on “Why don’t they buy in London too?

  • They are rich and nowhere to spend their money, simply as that!

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  • tenyearstogetmymoneyback says:

    They are just cutting out the middlemen (banks).
    If they bought in London they would (in an manner of speaking) be buying from themselves,
    swapping a CDO for real ownership.

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  • “The purpose for this trip is to find good deals for immigrants and investors. We do not intend to bring speculators to Canada and, during the promotion events, we always highlight on the market stability as opposed to the great volatility in China.”

    Here are a few words of warning about Canada’s property market:

    http://www.youtube.com/profile?gl=GB&user=MaxKeiserTV#p/f/0/xZJm7zWpuII
    (commentary on Canada’s economy and property market starts at 14:15)

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  • Quiet guy,

    Interesting clip, thanks. The annoying thing about videos is that it’s hard to follow up references or verify facts; I’m not entirely sure whether to take this person at face value. I’ve heard the positive story of Canada’s mid-90s transformation; now here’s this guy with a completely different version.

    Back to the original article…. it’s always amazing to see the naive investors buying “downtown condos” – that’s new-build flats in regenerated city centres. Does that ring any bells?

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  • “The annoying thing about videos is that it’s hard to follow up references or verify facts”

    Fair comment. I’m something of a fan of Molyneux so I’d have to admit to being a bit biased in his favour.
    If anybody’s interested, you can have a look at his wide ranging commentaries here:
    http://www.youtube.com/profile?gl=GB&user=stefbot#g/u
    http://www.freedomainradio.com/

    That said, it’s not too hard to find other sources who also fear a Canadian bubble.
    http://www.financialpost.com/reports/property/Jarislowsky+says+convinced+Canada+housing+bubble/2555032/story.html
    http://www.propertysold.ca/blog/2010/06/29/vancouver-real-estate-to-the-moon-alice/
    http://americacanada.blogspot.com/2010/05/canada-versus-piigs-whos-more-indebted.html

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  • qg,

    I’ve heard the bear case for Canada too. It was just his one line about Canada’s ’90s recovery being all smoke-and-mirrors, that one was new to me.

    Going over his numbers, they don’t sound too bad either. Canada’s national debt (government) is just $15,680 per person (source: http://www.debtclock.ca). The overall debt, according to your video, is $116,000 per person. It turns out that that figure includes unfunded liabilities (pensions, PFI schemes, etc.). Those liabilities won’t hit Canada this year or next; probably not for at least another decade. We certainly can’t point to their unfunded liabilities and claim it will cause a house price crash in the near future.

    More relevant is the house price to income ratio, which he quotes at 7.4x. I wonder if that figure isn’t being distorted by all those Chinese buyers, churning the market at the high end and making the average look higher. Also there are huge regional disparities. House prices in Vancouver – closest to China – have gone through the roof, whereas prices in more ordinary cities such as Winnipeg seem reasonable (to me at least). This also ties in with Krugman’s Flatland And The Zoned Zone theory – Vancouver is tightly restricted by natural geography, whereas Winnipeg can expand in any direction.

    Is Canada in a bubble? In some parts of the country, but not in others. If the bubble bursts, China’s banks will be worse affected than Canada’s.

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  • “Is Canada in a bubble? In some parts of the country, but not in others. If the bubble bursts, China’s banks will be worse affected than Canada’s.”

    Ha Ha, those mortgage for Canadian houses are obtained from banks in Canada not in China!!!!!!!!!!!!!!!!

    Chinese banks are prohibited to grant mortgage in relation to overseas properties! Even if you can obtain loan from within China, Yuan is not an international currency and no way to remit the money overseas. Don’t forget China is a planned economy and all Chinese Banks are state owned.

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  • Simon…..is that Bruce Lee speaking?

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  • “Is Canada in a bubble? In some parts of the country, but not in others. If the bubble bursts, China’s banks will be worse affected than Canada’s.”

    Better save your worries about yourself first!

    The Chinese are rich! They don’t need to worry about their bankers call loans, threaten about repossession on behind mortgage repayment, housing benefits cut, government austerity, become jobless etc…………..

    I can tell you that without government bail out, half of the British banks had gone bust already!!!!!!!!

    If the HSBC (Hong Kong & Shanghai Banking Corporation) hasn’t retained a close tie with Hong Kong and procured support from Hong Kong people for its right issue, it should have gone bust or asked for UK Government’s bail out at last.

    We save your ar_se!

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  • British & American Scam Banking

    JP Morgan, Goldman Sachs they are all engaged in scam banking business. British and American banks shift their mortgage loans portfolio RISK to foreigners by Ponzi scheme. For instance, Lehman Brothers packaged its high risk mortgage debts/CDS/CDO portfolio into disguised mini bonds products and acts in collusion with its S & P, Fitch & Moody’s cronies to confer triple A rating to those fraudulent products and sold them to Asian in Hong Kong, Singapore and Malaysia.

    Those products are banned from selling by SEC in the United States to protect American and aimed at deceiving foreigners.

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