Topic: China real estate crisis: Buy a house and get a gold bar! No Bitcoin unf! (Read 654 times)

Sometimes he's right. No one is always correct.
China also muddles its credit worthiness https://archive.ph/lS46V
Original: https://www.bloomberg.com/news/articles/2024-09-12/china-detains-investment-bankers-takes-passports-in-graft-sweep

Franky:
- you can't buy land in China, all land in China is owned by the state
- foreigners can buy a property in China only after residing in the said province (with only two exceptions, Guangxi and Inner Mongolia which are autonomous) for 12 months
- you are limited to one property tied to the prefecture-level where your residence permit is issued
- you can't rent your property if you're not a Chinese resident, you're breaking the law

So if you think China has ever tried to encourage foreigners to buy real estate you're again mistaken, as usual!

the over supply was a itchy trigger finger plan to build more homes in anticipation of couples having more children so needing more then a 2 bedroom home(china changed its 1 child policy to 2 and then later 2 children to 3..)
however those people whom are of child bearing age are already indoctrinated into thinking 1 child is healthy for the family and society and so dont push out more kids to need to then upgrade to a bigger house/apartment

so it then becomes the anticipation of the next generation that are taught that 2-3 kids are fine and it will be those (now late teens) that will couple up and settle down and have 2-3 kids to fill the new apartments. however that is not today.

so they simply built too soon not realising their 1 child policy indoctrination of the last generation would work so well that even those with one child now still wont want 2-3 kids.

there was alot of other economics too about china hoping the middle east(UAE) would buy these properties and then rent/lease them out as landlords to these anticipated couples wanting to start families.. but even that money didnt come through because the middle east ran their own numbers and timelines and seen china built too soon

there eventually will be demand for the supply, its just a few too many years too soon. UAE wont want funds tied up in property for 3-10 years when the property market works best on a same year flip in most cases (unless the property exists in a tourist/high employment zone(which those properties are not)) when inflation is low compared to other countries, they only want to buy and sit on empty properties long term when inflation is high

It's really not reasonable to do marketing and expect everything to change. Reality is that there is a limited amount of people with money that can buy a house, most people in China do not have enough money to buy a house, and the ones who can already did, so when these companies made so much more than what was needed or even what was being affordable, they bankrupted, gold bar doesn't make sense in that marketing sense.

Maybe some rich people could buy in bulk, surely there are people who can buy like a thousand houses and rent them out for income, but they already did as much as they want, so not many houses are being sold.

Construction should have been slower, they like fast works, but this wasn't something they should have been fast on and that is why it doesn't feel like a good idea. They will not be saved easily, they just have to wait with the current situation, let the country grow and they will end up getting a greater result eventually when things are better.

This is just one manifestation of the global crisis of the Chinese economy.... One of the reasons is the total subsidization of the industry, its overheating, and subsequent decline. And this is against the background of the loss of sales markets (I mean “expensive”, solvent markets), as well as the destruction of economic ties with the Western world and markets accordingly. Which for an export-oriented economy is almost synonymous with death.... But while the Chinese government is trying to pretend that there are no problems, it looks more and more comical.

As for gold and its reserves in China, this is also a story with many unknowns. Officially - China has been the largest buyer of gold on the world market since 2020. But... data on reserves are classified, no one has access to China's gold reserves (as well as other countries), and knowing the historical facts about information manipulations of the Chinese government to create a positive picture, we can not be sure that the declared reserves correspond to the real ones. And it is not clear whether it is gold or tungsten in a gold shell....

China's inflation rate is between 0.3% and 0.6% on a yoy basis.
You're mistaken the problem here, it's not that houses are not affordable or prices are up, it's that Chinese people don't want to buy anymore because of oversupply, a possible deflation on the horizon, the attractivity of an investment going down, migration policies and a change in lifestyle where the mandatory house before getting married is no more needed since they don't marry at all, with a decline of over 10% over pre covid numbers.
And China needs real estate prices to go up since it's a huge chunk of their GDP and income!

China got old before getting rich, they don't have the money for grandiose investments and they don't have the need for an oversupply of things that nobody is interested in.

Yeah, it's for sure going to be back but we don't know when, and even them, they don't know when it will.

They're a communist state and that's why they can do anything. I think it was also in China where deposits of their own people have been frozen due to the unforeseen turmoil of their economy. I wonder what's really the deal there if they're having a bad economy but in some "propaganda" videos say that they're doing well and have a lot of jobs even for the new graduates that can cater majority of them.

We can't expect the results over time and if we try to keep things via shortcuts it won't hang there for too long will obviously backfire at them.

But they are not really capitalist not democracy so they can do anything as they wish and no one will be asking questions about that but in other places things will get real dirty that's why we better look for the long term solutions which may be less harmful than instant solution.

Gone are the days when even minimum wagers could afford to buy a house and pay a mortgage without having any financial pressure. Today, because of inflation and other factors combined, many are choosing not to reach their dream houses anymore. Cost of necessities are increasing but wages aren't, thanks to capitalism.

It's going to take time for that when the signs have been obvious from the fall of Evergrande.

The real estate market has always been up and down and now with the rapidly increasing inflation people can't afford to buy the house like they used to be because the salary isn't appreciated along with the inflation that created imbalance in the system that will take time to be corrected.

Maybe the Chinese government needs to work on their interest rates for better solution than using the perky ways which obviously not effective in my opinion.

Thanks for the share up bud. I wasnt expecting that there are indeed abandoned projects something huge scale as this which turned out to be a ghost town. I have read up everything on the link
given or provided above on which it is really that truly devastating into its developers. There are indeed tons of factors on which it could affect out like affordability plus into those times
where Covid is still in existence on which this could really be that resulting into this kind of outcome or result. You have definitely said the right thing that about in contrast with their mindset on having that more
than on what you do need will really be having that also its cons too. Not all the time that real estate business would turn out to be a success on which majorities mindset will really be something like this.
Risks is always there at the side and if you wont really be having those kind of good plans on where you do make those properties would be located or whatever factors still needed then
you would really be still suffering on the same outcome or result.

China banned and unbanned Bitcoin multiple times so I am not sure the exact legality status at the moment but based on the Google search it was banned in 2024 Q1 so even the real estate agents wants they can do it and they don't have a much option cause we are talking about China not some Democracy.

Here in India too the real estate market has been up and down and since COVID the market is facing decline though on average scale but it's something happening due to the evolution of technology now people can be more scattered all over the country instead of a certain town for jobs and everything.

I think it's just about the fact that some people prefer this one and I have no idea why they are doing it. They think it's a way to get away from trouble but the reality is that it is not going to be that easy to handle any of this. We should be considering this as something that is a bad investment considering as long as you keep getting more real estate you risking it being a bigger risk, diversification is important if you could buy a few and still have investment at crypto that would be great but if you do not then you are going to be fine.

I think the best thing would be investing into a few different things and we could make a lot of money with a lot of diversification, if you want to invest into it then you could do something that will take a while and we could be doing something a lot better. I believe that the best thing to do right now would be just focusing on what you are going to do a lot better and can't be really taking a risk.

So it's about some of their philosophy of having more than what you really need - but I still don't understand that at some point CP didn't see the problem and decided that such a practice had to be stopped because otherwise what's happening now will happen. Maybe the problem is in the Communist Party of China, because I know how communism works, I can only say that they are masters of pushing problems under the carpet, of course until there is no more room under the carpet and everything starts to come out.

I take a look at their ghost towns and see that their peasants have perhaps a unique opportunity, fields between luxurious villas and livestock that live to a high standard




Source

China is overbuilding, it's hard for us to picture this as we have a completely different mentality.
Maybe someone from Romania could explain this better as they have the same thing about buying and owning a house, in China with limited opportunities and a different midnset a house is a must, so a lot try to buy one or have them as an investment.

So you have continuous building because there was demand to a point where clearly demand is no longer there after enormous growth and everyone is wondering what the hell we sold 100 million in the last 10 years why can't we sell another 10 million per year now? They didn't realize there would be oversaturation and that most who afforded one had already contracted on, they thought everyone would be willing to invest, well, you can't have every family owning 3 houses as an investment cause you will never have 3 billion renters, right, especially in a country where everyone wants to buy not to rent from a landlord!

They could be indeed 1.5 billion, they've built for 300 million extra! And still going because if they stop building companies with tens of billions and millions of workers go bankrupt and unemployed!

Where does their real estate market situation actually come from? The fact is that they built massively and obviously without making any meaningful assessments in terms of the number of built apartments in relation to the number of people who will need them - but for me the main question here is "where are all those Chinese people who don't buy new apartments"?

I remember that at their last population census, there was a Chinese (probably an expert in demography) who stated that China actually has about 1.2 billion people, not about 1.5 as is usually said officially. The one-child policy, which existed for quite a long time, was obviously successful, but can we say that it may be coming back to them in a negative sense?

Revisiting this topic
https://www.scmp.com/business/china-business/article/3278518/chinas-august-home-prices-drop-fastest-pace-9-years-small-cities-bear-brunt


At the same time Fitch has downgraded Vanke one of the largest real estate still unaffected from the trio to BB-, 180 billion in liabilities, at the same time China has offered 300 billion to date to help home sales, relaxing policies in some cities for second homes and despite that prices keep going down even in Beijing and Shenzhen.

Pretty soon apartments will no longer have a gift attached but will be the side gift in dealings if this continues.
 

If this happens in my country, it is certain that it will develop quite a lot because it is in line with the understanding of the ancients about gold as one of the most promising investments. By buying a house, they will also get gold so that in one hit they can get two benefits at once, although sometimes the terms and conditions definitely apply. The only thing I think this can be manipulated is because most people have difficulty recognizing real gold, especially when faced with ordinary rural communities. It could be that the amount will be limited and in the future the gold will not be enough to be given as a gift when people there are competing to buy a house.

Is it possible that this is a hatred of bitcoin in particular or crypto in general because there is no reason that is much more profitable to buy a house given gold to buyers. Of course we see the Chinese government still firmly prohibiting crypto and they are trying to do something to prevent it. Although we don't really know how the government there is, if we follow it on various channels or news, they are quite authoritarian in controlling their people. Am I wrong?

Still going on, prices are collapsing as much as the government is letting them go down
https://www.reuters.com/world/china/china-june-new-home-prices-fall-fastest-pace-9-years-2024-07-15/

They are slowly out of options, they've lifted all restrictions, construction has slowed down, and yet demand is not there.
This comes from a paper that is basically the Chinese version of russia today:
https://www.scmp.com/business/china-business/article/3259078/china-property-beijing-needs-us21-trillion-revive-sector-rescue-plans-have-not-been-good-enough
if they acknowledge 2 trillion is needed to help the sector how much worse can it?


 

The article on the Guardian and the start of the discussion is from a year ago, so that's not news. Is that still going on, or why has it resurfaced on the forum? It looks like the issue with the property crisis is still relevant, but China is employing new strategies, such as asking local governments to buy unsold houses, and then transform them into affordable housing options. So far, the attempts to rescue the real estate market haven't been successful (and that includes the gold bars measures). I don't think replacing gold with BTC would've made a difference, but this new policy is quite different, and we'll see if it works.