Friday, October 28, 2011

Does this mean they’ll start buying flats in London instead?

Shanghai Homeowners Smash Showroom in Protest at Falling Prices; Developer Warns on Price Drops

A group of around 400 homeowners in Shanghai demonstrated publicly and damaged a showroom operated by their property developer after the company said it cut prices. Home buyers had wanted to speak with the developer to refund or cancel their contracts but were unsuccessful, according to local media. One report said the price cuts exceeded 25%. The Shanghai property-owner demonstration found little support on China’s Internet, where most still expressed worries that housing prices are too high. China's largest real estate developer believes the country's property market, a key driver for the economy, has turned and expects conditions to worsen in the coming months as sales prices volumes decline further.

Posted by drewster @ 10:58 AM (1250 views)
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5 thoughts on “Does this mean they’ll start buying flats in London instead?

  • oh dear…china was supposed to be the growth of the world economy

    looks like its gonna pop big time

    also looks like every country in the world has gone on a massive spending/denial spree since 1996…there can be no real solution to this mess bar a reset and 20 year depression

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  • It was government intervention that stopped their bubble. The government could easily re-start it again if they act swiftly.

    When China slows, the commodities markets will take a tumble. A lot of mining companies are listed in London, so the FTSE will be knocked hard. Commodity currencies such as Australia’s and Canada’s will fall a bit too. I imagine copper would be hit badly, but it seems to react more like a precious metal these days, gyrating wildly at every bit of news. Good news for drivers: the oil price should come down a fair bit too. I’m confident we’ll be paying less for petrol and diesel this time next year.

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  • perhaps bizarrely,deflation is what we need.Although leaders are petrified of it because it increases the value of debt…maybe we need a period of deflation to get a real grip on this crisis

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  • One needs a little perspective here – China growing less fast is not China getting smaller..

    Whilst there have been some wild speculative property investments, the underlying picture is one of a country that is going to continue getting hungrier for commodities, as will many other developing countries.

    That makes Australian mining shares a pretty good place to lodge your dosh IMO..

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  • ut,

    I agree that growing less fast is not the same as shrinking, absolutely. But the commodity markets have already priced in high growth; oil costs over $100 a barrel because demand is expected to continue to increase. If growth slows, the markets will re-price oil and copper and the rest. That will have an effect on Australia and Canada.

    The argument made in this article is that China has had an unsustainably rapid growth rate in the last few years, largely fuelled by loose credit and the property market. It takes a lot of steel, copper, concrete, etc. to build a new block of flats. China has been building an awful lot of properties; they are not sold to owner-occupiers, not even to buy-to-let investors, but merely sold to speculators desperate for somewhere to invest. It’s American-style “flipping” all over again. Yes there are a billion people in need of somewhere to live, but (a) most of them already have somewhere to live, and (b) most of them can’t afford the high-end luxury flats that are being marketed to speculators.

    Personally I’m less comfortable with mining shares today than I was in the past.

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