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Thinking of buying that swank new apartment in the French Concession? Now's probably not the time.
Shanghai and Beijing's housing prices, which had been steadily increasing for the past five years, are now in a sudden free fall. The problem seems to be multifold.
Obviously, the burst of the housing bubble in the U.S. has reverberated across the world and hit the market over here. But even though house-buying has generally been safer here in China - Chinese have always had to pay larger down payments on houses and often pay fully in cash - the country has problems of its own.
For one thing, over-construction is widespread in China. Nationwide housing prices are likely to be down 10% to 15% this year, but in Beijing and Shanghai - where construction and speculation reached some of the highest peaks, estimates are closer to 15% to 20%, according to TIME Magazine.
Analysts estimate that there are now about 200 million square meters of constructed but unsold apartments and houses in China, and Ren [Zhiqiang, a development company chairman,] worries that figure will continue to rise without "tangible, positive incentives" for new buyers.
So all those huge new buildings in Shanghai? Wait around til the sun sets and you'll see how many of them are actually filled (not many). And the government is still trying to motivate developers to build more low-cost housing, which can only drive house prices lower.
Considering that this coincides with a general shrinking of foreign workers' housing allowances and the value of their respective currencies (the won has been particularly hard hit), buying a house in China is no longer the safe investment it was in the past.
Cartoon from the China Daily.
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It depends where you buy. We bought our appartment buy Nanpu Bridge 2 years agao for 12 000 RMB a square metre and the asking price is now 18 000 RMB.
That doesn't necessarily mean we would get the asking price if we chose to sell tomorrow, but I'm living in a rundown downtown area that is on the doorstep of the Expo area that is ripe for development and is not part of the expat market.
I've read reports that property prices could fall by as much as 50 percent in some areas where there is over supply of empty housing. I agree that the expat market will also be hit by falling demand.
Somewhere in between there is the local housing market in densely populated Chinese areas where 85C and Dia outnumber Starbucks and City Supermarket. I can't see these places losing their value to the same extent as your blog post suggests.
Don't you mean it is a good time to buy? Better than buying at the top last summer at least, right?
Uh, someone obviously is writing based on skewed info. While the market has dropped, in certain areas, I must have a different definition of "free fall". How about pulling some primary source info rather than just re-reporting something that has likely already gone thru translation and misinterpretation?
I base my criticism on the fact that we actually very recently (ink not dry yet) sold property in Shanghai at around 25% off the peak price but that is hardly a free fall.
Of course, buyers and sellers will define this market differently.
That house is on fire...Motivated seller!
I wonder how much money Beijing is spending to prop up the major developers, ie silent bailouts? And still lots of office buildings going up...