China - Housing 01 (May 08 - May 10)

[winston]

why didnt you advice him?

Ha Ha ... I dont like to invest in properties and I certainly dont know the property rules in China ...

[winston]

View on property improves

The business outlook of mainland property developers has improved as prices may be less volatile in the second half on lower homes supply, but the sector risks state intervention should prices surge, analysts warned.

Home sales are set to drop in rest of the year from the first half, Standard & Poor's corporate ratings associate director Bei Fu said yesterday.

"It is hard to repeat the transaction volume of the first half," Fu said.

"Affordability is declining because the average selling price is higher and supply will be lower as many developers slowed down development in late 2008."

The agency raised its rating on the outlook for mainland property to "neutral" from "negative."

"Before the global economy and Chinese GDP growth becomes more robust, the government may not have a lot of incentives to suppress the market the way it did in 2007," Fu said.

On the other hand, Credit Suisse forecast home supply to leap significantly from the fourth quarter as many developers boost the area under construction.

"While listed property developers hold different views on the timing of the upcoming supply surge, most of them agree that the current supply shortage is temporary," Credit Suisse analysts Jinsong Du and Ronney Cheung wrote in a report.

"We maintain our view that investors should switch their focus from price appreciation potential to the [benefits] of rising property volumes," they said, maintaining a rating of "overweight" for the mainland property sector.

Goldman Sachs said home sales for the week ended August 3 fell 10 percent from the previous week, a poll of 14 cities show.

Property prices rose 3 percent week on week, another poll of nine cities showed.

MANDY LO, The Standard HK

[winston]

If u own any Shanghai based property company, u may want to be abit careful ...

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Shanghai Mayor Seeks to Check ‘Too High’ Home Prices (Update1)

Aug. 5 (Bloomberg) -- Shanghai will take steps to cool the city’s real-estate market as housing prices in China’s financial capital are “too high,” Mayor Han Zheng said.

The city government will increase the supply of land for property development and speed up construction of affordable housing for low-income families in the second half of this year, Han, 55, said today in an interview in Shanghai.

Record bank lending in China drove average prices for new homes 6.3 percent higher in June in 36 large and medium-sized Chinese cities, according to government data. That gain came even as urban unemployment rose and wage growth for workers in Chinese cities slowed.

“The government should do something to effectively control the speed of growth of the real estate market,” Han said. “The housing price in Shanghai is already too high. We must prevent excessive inflation of home prices in this market.”

Chinese banks made 7.37 trillion yuan ($1.07 trillion) of new loans in the first six months of 2009 as the government sought to bolster economic growth that slowed to the weakest in almost a decade in the first quarter. Some of the money entered China’s property and stock markets, Cheng Siwei, former vice chairman of the standing committee of the National People’s Congress, said in June.

Massive Liquidity

“This is a huge amount of liquidity we’re talking about in the economic system,” Han said, adding that he doesn’t have statistics showing how much of the bank lending was funneled into financial markets. The government has introduced rules to stop loans being diverted to stocks and property in a bid to prevent speculation.

Home prices in China will rise 20 percent by the end of 2010, UBS AG analyst Eric Wong said July 30. Shanghai’s property market will probably be the strongest in the country and residential prices may climb as much as 20 percent over the next year compared with the final quarter of 2008, according to Stanley & Partners Investment Management Co., citing recent land-option contracts and commodities.

Registered urban unemployment rose to 4.3 percent at the end of the first half from 4.2 percent at the end of 2008, according to government data. Average first-half wages in China’s cities grew 12.9 percent, 5.1 percentage points slower than a year ago, the statistics bureau said.

Gemdale Surges

Investors have been quick to capitalize on the rebound in China’s property market. Real-estate stocks gained the most among the five industry groups on the Shanghai Composite this year. Gemdale Corp., a Shenzhen-based developer that got 35 percent of its sales from Shanghai, has more than tripled.

Shanghai’s government is also continuing to work on policies to emulate the world’s financial centers, Han said. China’s central government said in March it planned to make Shanghai an international finance hub that is commensurate with the nation’s economic strength by 2020.

Making the yuan a more global currency will be key to achieving that goal, Han said.

“The yuan is still not an international currency and still not freely convertible,” he said. “That’s why the measures we’ve taken in Shanghai with regards to financial innovation and our efforts to become a more sophisticated financial market are all centered on boosting the position of the yuan.”

Currency Regulations

Fang Xinghai, director-general of Shanghai’s financial services office, has urged changes in foreign-exchange rules and other steps to encourage foreign private-equity firms to set up in the city, the Wall Street Journal reported today, citing an interview with Fang. Calls to Fang’s office today weren’t immediately answered.

Shanghai’s mayor also said he is still awaiting final approval from the central government for a $3.59 billion Walt Disney Co. theme park to be built in the city. Disney and Shanghai reached an agreement in January, almost three years after Mayor Han said in March 2006 that Shanghai was making “preliminary preparations” to build a theme park.

“We’ve been in love with each other for many years and we have a very strong commitment to each other but we don’t know when the wedding will become a reality,” Han said.

Disney opened a theme park in Hong Kong in September 2005. During its first three years of operation, Hong Kong Disneyland has averaged 4.5 million to 4.6 million visitors a year, Helen Chan, an economist for the city government, told lawmakers last month. That compares with an initial target for the park to draw 4.2 million to 5.6 million visitors a year, Chan said.

[millionairemind]

Has it ever gone soft in the first place???

Aug 10, 2009
China property prices pick up

BEIJING - PROPERTY prices in Chinese cities picked up further in July, official figures showed on Monday, as the effects of government stimulus efforts gained strength.

Prices of real estate in 70 major cities jumped by one percent year-on-year last month, the National Development and Reform Commission and the National Bureau of Statistics said in a statement.

That followed a 0.2-per cent rise in June. Until then the index had slumped for six months since December, as it was hit by previous government attempts to rein in prices as well as the global economic crisis.

Prices of new houses increased 0.3 per cent in July from a year ago, compared with a drop of 0.6 per cent in June, while those of existing houses went up by three percent, up from 2.2 per cent a month earlier, the statement said.

Since October, the government has taken a series of measures, including tax breaks and preferential rates for first-home buyers, to avoid a crash in real estate, which accounts for more than 20 per cent of urban fixed investments.

In addition, inflation expectations due to a surge in new bank loans this year is also driving the sector's rebound, analysts argued.

New loans for the first half of the year amounted to a record US$1.1 trillion (S$1.58 trillion), recent central bank figures showed. -- AFP

[winston]

Has it ever gone soft in the first place???

Yes, it did soften late last year. Things started going up after CNY.

[kennynah]

good for the chinese people lah... when SSE dropped precipitously in 2008...many ordinary retail investors suffered big time... i was quite happy when SSE rebounded so much.... hopefully, these people who lost and hung on knew when the 2nd lease of life presented them the chance to close off their positions..

[winston]

The Real Reasons for China's Real Estate Boom

Since March, housing prices in 70 major Chinese cities have stopped declining and begun to rise. But why has China seen such a strong rebound in its real estate market this year?

Estate sales area is also rising. In the first half of 2009, estate sales area in China rose 31.7% year on year. Sales area grew more than 100% in Xiamen, Fuzhou, Ningbo, Shenzhen, Hangzhou, Wuhan, Tianjin and Suzhou.

Despite the existence of rigid demand for housing, two of the real reasons for the current boom in the real estate market are speculation and "land financing." provided by the local authorities.

The central government was once determined to control housing prices to promote social harmony. In early 2008, due to the strict supervision over both the real estate market and the banking system, speculation was restricted and house prices fell. However, when the country was hit by the global recession and supervision was loosened as part of the government's economic stimulus package, speculation began again.

The other factor is "land financing." Most of the local authorities in China rely on the sales of land as well as the ensuing construction fees and taxes for revenue. According to a report released by the China Federation of Industry & Commerce in March 2009, fees paid to the government, comprising the land purchase plus fees and taxes, account for 49.4% of a real estate company's total costs. Therefore, local authorities are glad to see a boom in the real estate sector.

In 2009, China's Zhejiang Province, an eastern coastal province adjacent to Shanghai, became the first to experience a revival in speculation. Beginning in January, Zhejiang's four major state-owned banks began to loosen the requirements for housing loans even though the China Banking Regulatory Commission admonished them to obey the rules released in 2008.

As a result, sales volume and prices in Zhejiang's major cities approached record high levels. In Hangzhou, sales volume reached 1.7 million square meters in May 2009, falling only slightly short of the record 1.8 million square meters sold in December 2007.

When a similar phenomenon emerged in China's other provinces, the surging figures in the real estate sector were judged to be signs of China's economic recovery because real estate investment made up 10.2% of China's GDP. Furthermore, the growth of the real estate industry boosts the development of several other industries, such as building materials, home appliances manufacturing, metallurgy, and mining.

The situation may be complex. A slowdown in manufacturing may influence the real estate market, because China has a binary economic system in which one part is usually hot while the other is cold. Was there a slowdown in manufacturing?

In May 2009, statistics from the National Statistic Bureau indicated that China's value-added industrial output grew by 8.9% year on year. However, this figure is incompatible with the growth rate of power generation released by the State Grid, which was -3.5%. Nor did the oil consumption volume coincide with the value-added industrial output data.

The strength of China's manufacturing industry can be judged according to the level of foreign trade. In the first five months of 2009, China's exports dropped 21.8%, while its imports dropped 28.0%. Declining imports indicate that manufacturing is slowing since most of China's imports are primary products and raw materials that are used for production.

When the investment environment in the industrial sector worsens, more money will go into real estate as well as into the stock market for better returns, thus pushing the housing prices and stock indices higher. According to data from the People's Bank of China, in the period from April to May of this year, the nation's total loans to enterprises in the industrial sector decreased by RMB 104.6 billion, while the medium and long-term consumption loans increased by RMB 187.1 billion. In China, most medium and long-term consumption loans are used for housing.

Another factor which pushes money into the real estate market is the public's anticipation of inflation. In the first five months of 2009, China's loans increased by RMB 5.8 trillion, exceeding the amount projected for the entire year. The fear of inflation prompts people to buy houses rather than hold cash.

In short, China's real estate market has been boosted by speculation, "land financing," manufacturing slowdowns, and fear of inflation. Since all of these factors are expected to persist for a year or more, the boom in the real estate sector is likely to continue.

Source: China Knowledge

[winston]

Aberdeen Trims China, Hong Kong Property Bets as Market Soars By Patrick Rial

Oct. 3 (Bloomberg) -- Aberdeen Asset Management Co. has trimmed its holdings of real-estate developers as surging prices in China, Hong Kong and Macau fuel concerns the property market may be overheating.

“Since March, the market was too fast in terms of a recovery,” Nicholas Yeo, head of Hong Kong and China equities, said in an interview yesterday at Aberdeen, which manages $38 billion in Asian equities. In terms of property stocks, “we’ve done what we wanted to do.”

A measure tracking 24 property stocks on the Shanghai Composite Index has soared 95 percent this year, the best performer among the broader gauge’s five industry groups.

The Chinese government’s 4 trillion yuan ($586 billion) stimulus package and a credit boom have helped boost real-estate prices. Home prices in China’s 70 biggest cities rose at the fastest pace in 11 months in August.

http://www.bloomberg.com/apps/news?pid= ... ohHa5HKBE4

[winston]

The real estate agents are doing cold calls again.

And you are starting to receive a lot of Trash SMS on real estate deals.

Both are warning signs that sales are dropping ..

[winston]

The China Files (Special Project): Real Estate

The real estate market in China, particularly the residential side, is a burgeoning bubble that is growing bigger and more breakable by the day. Land and housing prices were already rising steadily when Beijing's stimulus package hit the sector in early 2009.

Now prices are surging, with developers, bureaucrats and investors cashing in while urban Chinese - once encouraged to invest in home ownership by the central government - become less and less able to buy.

http://www.investorsinsight.com/blogs/j ... state.aspx