Sudden rise of the Chinese currency rates, depletion of bank deposits while loans granted explode, appearance of a “shadow finance” signs affecting China’s financial markets dangerously reminiscent who prefigured the US subprime crisis 2008.
It has been over two years since we say that a housing crisis brewing in China without providing details as to when it will happen. Briefly recall some background elements.
For fear of the impact of the subprime crisis, which has hit the developed countries, the Chinese government has appealed to the banking system, which contributed a significant amount of low-interest loans. The Chinese rushed to this endowment into debt is irrationally.
However, the financial system has become, over time, machine recycling household savings, particularly to investments of large public companies. This was followed by a strong distortion in the allocation of capital. Public banks have lent, inexpensive, large public companies that believe they have a state guarantee, which enabled them to invest with confidence. Small and medium sized businesses struggle to access the necessary loans for their development in the absence of competition among banks on the price of credits.
As for households, realizing that the real estate prices increased faster than the rate of inflation, they have little invested their savings in a savings account. The stock market is still unstable and knowing that it is difficult to get out of the funds of their country, they have invested in property in danger of creating a bubble. This unbridled development has contributed to the economic growth of the country – the weight of the real estate sector is now alone, nearly 18% of GDP.
Rising real estate prices in China has accelerated sharply in October: the average price of new homes m² in 100 major cities rose by 1.35% (11.75% year on year) to reach 12,447 yuan. This is the 19th consecutive month of rising! But if four major cities (Beijing, Shanghai, Shenzhen, Guangzhou) saw the cost of m² increase on average by 20% year on year – this trend is expected to continue as demand is high – the situation is, cons, very different in urban areas at a lower level and should even worse.
Indeed, during the strong passion for real estate that hit the country, local governments have become owners of a huge amount of land in order to sell them, pocketing a strong gain in the process. Although part of the land was sold at full price, there remains much that now has the most trouble finding buyer. Many inhabitants of the interior regions of the country that do not have sufficient income to become homeowners despite successive salary increases, many developers have had to cancel or postpone a number of projects. But local governments to cope with maturities of loans for such purchases, some land is sold below their purchase price, which jeopardizes the finances of many cities.
Lately, money market rates are high and the Shibor (Shanghai Inter Bank Offered Rate) rose sharply. It’s sort of a tightening of interbank credit. The Chinese capital market has been facing a severe shortage of liquidity, causing three weeks a surge in short-term rates and jeopardizing the ability of banks to finance themselves and make loans. The central bank announced in late July, having injected 19 billion yuan (2.5 billion) into the banking system.
The risk of a high interbank interest rate that banks lend to each other over money. Since the Chinese economy is very dependent on credit, a credit crunch means less economic growth. The housing bubble and credit is due to the liquidity injections. If the lack of liquidity is long and severe, then the probability of multiple failures becomes inevitable. The worst scenario would be the bursting of two bubbles. Obviously, the current developments are critical.
The real estate market overheating problems in China are so severe as those known by the United States before the subprime crisis, especially as the measures launched in recent months by the central government to cool the Chinese economy struggling to reassurance.
The city of Nanjing, in eastern China abolished the rules restricting individual ownership of real estate.
The system until now has set in force a maximum number of apartments that an individual can possess.
Nanjing, in Jiangsu Province, is the 40th of 46 Chinese regional entities having imposed such rules to abolish real estate ownership. The purpose of this deregulation is to promote the real estate market when the industry shows signs of slowing down which could suffer the entire Chinese economy.
In August, home prices fell for the fourth consecutive month in China, the average prices dropping 1.4% overall.
Cities that have not eased or lifted these monitoring activities, including Beijing, are the most populated. The real estate prices are still there to record levels (in addition to the capital, is the case in Shanghai, Shenzhen, Guangzhou and Zhuhai in the cities and Sanya, in southern China). Analysts said that deregulation should not be implemented.
However, the movement should continue elsewhere and affect other rules governing real estate transactions. Chen Cong, real estate specialist at Citic Securities, thus expected that some local executive “relax the rules on installment payments or interest rate mortgages.”
For now, buyers of real estate in China must pay a deposit of 29% for first-time buyers and 65 to 73% for the purchase of a second home. Interest rates are fixed at 125% of the base rate charged by the Central Bank.
The Chinese real estate market showing worrying signs of cooling. This could have an impact on the economy, starting with the construction industry. Overview of threats and rescue operations undertaken by the Chinese authorities.
Long time powerless to halt the soaring property prices, China is undergoing the reversal of its real estate market. After years of overheating, housing sales in China slumped effect of 10.9% year on year in the first eight months of the year, the government said. “One of the biggest housing bubbles in modern economic history is being deflated in China,” predicted a few economists such as Tamara Jiang.
Specular growth of bank loans
According to her, real estate prices soared from an average of 650 dollars per square meter in 2000 in a city like Beijing, to more than 2500$ in 2014.
However, in August 2014, among 72 major Chinese cities, prices of new homes in 68 cities recorded a fall in August month on month, against 64 in July, said in a statement the National Bureau of Statistics (NBS). For existing homes, 67 major Chinese cities have seen a decline in prices in August, against 65 cities in July, said the NBS.
Now, experts agree in describing a persistent deterioration of the Chinese property market, pointing to the tightening of credit conditions, the financial difficulties of the developers, and the wait buyers believe that prices will decline further. It must be said that the Chinese government has decided to end this year with a form of laxity that prevailed in the management of local authorities, who indulged in an orgy of investment and real estate loans, boosting their debt in conjunction with an explosion of shadow banking.
Steps to ease credit conditions …
To limit the fall of the housing market, the Chinese central bank announced late on September 1, however arsenal of targeted credit easing measures to stop the deterioration of the real estate market. Thus, people who have already taken out a credit and who will benefit from paid benefits reserved for first-time buyers: lower repayments, favorable interest rates and an intake of only 34%, said the Chinese central bank (PBOC, People’s Bank of China) in a statement.
Banks will also give their customers buying a second property in a significant reduction on rates, and offer new loans to customers who already own two or more properties, which was previously banned. Finally, institutions will have a wide latitude to determine the interest rate and the level of contribution asked, said the PBOC.
The slowdown in the real estate and construction markets – pillars of the Chinese economy, as property investment represents 15% of China’s GDP – the rest could threaten the growth target of about 7.9% that Beijing has set for 2014. Recently, the International Monetary Fund (IMF), however, confirmed its growth forecast to 7.8% for the Chinese economy in 2014, but warned of “short-term risks” on a overheated real estate market .
For more China economy news visit the following page
Have you been seriously considering going into the real estate market in China? Today we are going to show you how you can be effective in real estate investing.
Do your study to discover what the regional home values are. In this country the property prices are always higher on the coast and in the biggest cities. Home mortgages and lease in China can supply a much better concept of a house’s value than any monetary statement. When you get a concept of the local conditions, your choices will be better notified.
Don’t buy a home that has not been personally examined by a third-party or neutral local expert. Chinese people have, of course, a better understanding of their local market. Sellers can offer to spend for the inspection, however that provides them the right to utilize a beneficial inspector. Hire your very own individual. Link with fellow foreign investors and find out everything or at least as much possible. There are numerous individuals interested in property investing in Asia. It is so popular, regional business neighborhoods have groups that concentrate on this particularly. Real estate investors can also be discovered on realty online forums and on social media websites. Sign up with up and discover what you can.
Listening rather than talking is the key to negotiation in China. Often an individual will certainly negotiate against himself if you simply let him continue talking. Listening will also assist you identify exactly what technique to take before you even open your mouth. When you want to get a financial investment home, you need to make certain that the rent you’re collecting will certainly cover the majority of the home loan payment you pay monthly. This will certainly get you started in a good position. Little is worse than paying cash out of pocket for your lease each month due to not having a monthly payment from the occupant to cover it.
Do not purchase realty financial investments that are sub-par. You could be drawn in to the numbers, however the house may have difficulty offering. It could cost more, paying for an excellent home will certainly equal to cash flow.
Don’t overlook to aspect in possible rental earnings when you are trying to identify the monetary worth of a house that you are considering buying. You can end up with thousands during a year for just renting out the home. After some time, the house could be resold for even more cash.
By now, you understand how numerous people have actually been able to make profit profit from real estate investing in China. Make wise decisions about the properties you choose.
<iframe width=”560″ height=”315″ src=”//www.youtube.com/embed/a0cjWplmHeg” frameborder=”0″ allowfullscreen></iframe>
Selling your home can be a complex matter wether your are in China or anywhere else in the world. There are probably lots of things about the house offering market in China that you do not even know about. In the following post, you are going to be offered valuable information that you can use in order to alleviate the anxieties of home selling.
When offering your house on the market, discover an appropriate real estate agent. Talk to pals and next-door neighbors who have actually recently purchased or sold a home, and find out about their experiences with a specific representative. If you don’t think that the representative is suitable for you, then the opportunities are you won’t have a benefit experience when it comes to selling your home. You can offer your home’s front door a good outdoors lift by removing your old house numbers and replacing them with new metal ones. Pick stylish numbers with glossy gold or advanced black numbers to represent your address. Show them in a horizontal or diagonal fashion for a remarkable look.
When figuring out the value of a home, lots of aspects are thought about. Things like the area, the school district, size, condition and homes that are equivalent to yours that are on the marketplace or have just recently sold. It is a lot easier to hire an appraiser to do the mathematics for this step of house sales. Set the mood during the showing of the home you want to offer. A fire in the fireplace, candle lights glowing on the tables and rippling water fountains make the home feel more relaxing and relaxing. These things might assist keep purchasers from discovering less desirable sounds that may be heard otherwise.
If you have a site where you advertise your real estate in China or anywhere else, launching a press release is an excellent way to enhance your online visibility. You increase your search engine visibility and promote your services in the long run when you release a press release and share news with your customers.
You must make yourself available when possible purchasers are seeing your home. Any opinions you attempt to provide them will certainly seem prejudiced and make you look like you are being pushy. Permit them to take a look at it by themselves or with a realtor, so that they can make a decision by themselves about whether they like it or not.
Being well-informed about real estate will certainly put you ahead of other potential purchasers and will certainly also help you have sensible expectations as you move to buying your house. Even a new purchaser can feel confident about house purchases when they are well informed. Sellers require to keep an account of all house renovations, appraisals, representatives, and other details related to the cost of their property. Purchasers ought to keep notes to compare homes, costs, and experiences with agents. A major selling point of a house is your restrooms. When you are looking to offer your home, make sure that your bathrooms glimmer.
If you have given them ample quantity of time to pay, even worked out unique arrangements that still aren’t panning out, you require to protect your interests. Offer them chance for them to leave on their own terms, but if that isn’t really accepted, then you need to secure your investment.
<iframe width=”560″ height=”315″ src=”//www.youtube.com/embed/JRsvT4n0j7w” frameborder=”0″ allowfullscreen></iframe>
As was mentioned at the start of the post, selling your home can be complicated, especially if you do not understand the procedure, which can be quite complicated in China. The above short article gave you some practical recommendations about house selling. The next time you are going to put your home on the market, use this guidance.
China recorded a growth of 6.1% in 2014. Overall in line with expectations. 2014, opinion is sharply divided between supporters of an acceleration or deceleration of the second world economy.
With growth up 7.7% in 2013, China has been the appointment of expectations and even slightly exceeded, since the consensus of analysts expected a slightly lower increase of 6.6% annualized . Yet it is the lowest rate recorded by the largest economy before the United States. Compared to the third quarter, growth is also apparent a little below expectations at 1.7% against 2% target by economists.
Little impact yet
However, little reaction on the stock market on Monday, the Chinese index falling by symbolically enough, less than 0.8%. “China delivers the figures she wants … Viktor Shvets analysis, Macquarie Asia, the most important is that the country is trying to change. Can restructure keeping growth rates at a reasonable level, it is quite the dilemma for 2014.
And then there are widely shared. With two distinct camps: those who expect a slowdown to 7% this year, the other that build instead on accelerating above 8.5%. Louis Kuijs, chief economist for RBS, which expects growth of 8.7% for 2014, “we expect that China will enjoy a better more global growth. The acceleration in the world should boost exports and business investment. “For him, the reforms carried out by Beijing will have little impact on growth.
Attention to domestic demand
Aurel-BGC, “in 2015, China could surprise positively if global growth is increasing, driven by exports and foreign investment. But domestic demand is expected to remain insufficient to offset a disappointing global growth. “In exchange, we begin to take the measure. Monday, Exane BNP Paribas downgraded Pernod Ricard underperformance and action loses more than 2%. It is the red lantern of the day.
Chinese officials confidently claimed on, Friday, Jan. 10, to now be the world’s largest trading power, announcing in 2014 an annual volume of trade for the first time exceeding EUR 2 943 billion, while state mixed figures for December.
China’s exports rose in 2013 by 7.9% to EUR 1 626 billion while imports grew 7.3% to 1 435 billion, according to figures released Friday by Customs. The trade surplus has swelled from 12.8% in 2013, to 191 billion euros – after rising by almost 50% last year.
In total, the volume of foreign trade increased by 7.6% in 2013 (EUR 3 061 billion), below the government’s target of 8% growth.
But with this record, “it is almost confirmed that China has overtaken the United States of America for the first time last year, the world leader in terms of trade in goods” (excluding services), s ‘welcomed the Customs spokesman, Zheng Yuesheng.
NET EXPORT SLOWDOWN
Commentators had estimated in February that this shift took place from 2012 but China Customs highlighted the technical differences in the calculation of the statistics of the two countries, and believe that it was only last year that China outperformed its rival – even if the American figures for 2013 are not yet published. Trade in the second global economy in December, however, had a more mixed picture.
China’s trade surplus has significantly reduced last month, falling by 17.4% year on year, to 19 billion euros. Cause: exports increased in December by 4.3% year on year to € 153 billion, a sharp slowdown from the 12.7% year on year in November.
However, “exports are in line with market expectations,” due to a high base of comparison in December 2012 (where swelling due to overbilling had been found), tempered Lu Ting, an analyst at Bank of America Merrill Lynch.
China’s economy recorded a net rebounded in the third quarter, and the Chinese authorities have announced an ambitious program of reforms to rebalance the country’s growth at the expense of investment in infrastructure and for domestic consumption. Which could, along with a “more favorable” international environment, continue to support the Chinese trade in 2014, according to the customs authorities.