From ‘Chinese Real Estate Bubble Pops: Beijing Real Estate Prices Plunge 27% In One Month’, zerohedge.com, 14 Apr 2011 [hat-tip Nemesis] -
“Prices of new homes in China’s capital plunged 26.7% month-on-month in March, the Beijing News reported Tuesday, citing data from the city’s Housing and Urban-Rural Development Commission.
Average prices of newly-built houses in March fell 10.9% over the same month last year to CNY19,679 per square meter, marking the first year-on-year decline since September 2009.
Home purchases fell 50.9% y/y and 41.5% m/m, the newspaper said, citing an unidentified official from the Housing Commission as saying the falls point to the government’s crackdown on speculation in the real estate market.”
… “For all intents and purposes a drop of this magnitude levered even 2 times (assuming 50% or so equity down) means that China is on the verge of a complete bubble implosion.”
Headlined for the chronological archive because of global importance.
It is hard to predict the immediate effect on us in Vancouver, which could be anything from instantly freezing up foreign buyers, to an injection of final buyers running from a falling Chinese RE market into what they perceive to be one of the only apparently ‘healthy’ ones left (Vancouver). Thus, possibly another example of the narrowing that occurs towards the end of speculative manias.
Regardless, the Vancouver RE market is far from healthy, and we’ll see the crash here too, sooner or later. We’re not anticipating 27% drop in the first month, but >50% drops by the trough.
We’ve been anticipating a broad global deflationary wave since late last year. Stock markets appear to have topped; now Australian and Chinese RE. -vreaa