“Yes, There Is Such A Thing As Falling House Prices” – Ordos Down 62.5% Or More In 2 Months

Posted on 3 December 2011 | 12 Comments

For example, local “Jinxin Han Lin Yuan” project , its second-hand house prices are around 10,000 yuan , while the market price now only is 3750 yuan.
The example given is a 62.5% decline but some properties may have fallen 70%. Either way, that is one hell of a price decline since September.
- From ‘Home Prices Crash 62.5% Since September in Erdos, a Chinese “Ghost Town”, Global Economic Analysis, 25 Nov 2011

This entry was posted in 08. Overextended Buyers, 14. Social Effects of the Boom, 15. Misallocation of Resources and tagged , , , , , , , . Bookmark the permalink.

12 Responses to “Yes, There Is Such A Thing As Falling House Prices” – Ordos Down 62.5% Or More In 2 Months

  1. bubbly | 3 December 2011 at 6:24 pm | Reply

    Ordos is a special case. We don’t have ghost cities like that.
    What we do have is areas with some overbuilding similar to areas around Phoenix or Las Vegas. For example South Surrey around White Rock. Look at the supply of townhomes and new SFHs. The supply is always relatively high and the price range is quite narrow. *If* the bubble pops, that area will be like a small Maricopa.

    • vreaa | 3 December 2011 at 6:33 pm | Reply

      Yes, of course, this is an extreme example: nobody is suggesting that BC prices will drop 60%+ in two-three months.
      The point is that property prices can go down. A lot.

      • Nemesis | 4 December 2011 at 8:53 am |

        [WSJ] – Bancroft San Diego Home Reduced 50% to $7 Million

        “Hugh Bancroft III and his wife Joy, members of the family who formerly owned The Wall Street Journal, are asking nearly $7 million for their home near San Diego. They had asked $14 million in 2008.”

        http://tinyurl.com/7p79rne

    • jesse | 3 December 2011 at 8:42 pm | Reply

      Thing with Ordos, it was built with someone’s money. That’s a big part of the issue — rebar, concrete, labour, all was paid for via loans that will be non-performing.

      I wouldn’t be surprised if one of my bank accounts has a little bit of Ordos exposure: counterparty, correlation, contagion, et cetera.

      • bubbly | 3 December 2011 at 11:14 pm |

        Who knows, it’s funny money in a post-communist country.

      • jesse | 4 December 2011 at 10:23 am |

        I would argue a political system does not change the base issue, how one distributes scarce resources. Building a ghost city at the edge of the Mongolian steppes is likely a waste of resources no matter how red it’s painted.

      • Basement Suite | 4 December 2011 at 11:41 am |

        “I wouldn’t be surprised if one of my bank accounts has a little bit of Ordos exposure: counterparty, correlation, contagion, et cetera.”

        That reminds me I probably own some Groupon shares, sigh. But I still like watching that train wreck :) .

      • bubbly | 4 December 2011 at 11:46 am |

        jesse, you are correct that the political system does not change the base issue, how one distributes scarce resources.
        I wrote post-communist, because it has a specific meaning – study what happened in all other post-communist countries for reference.
        Also, you are forgetting that money today is only ones and zeros in some computer and that the accountants are the creatives in this environment. Politics does matter.

      • bubbly | 4 December 2011 at 11:49 am |

        To be more precise – there will be repercussions, but their exact nature and timing is hard to predict. If everything else falls apart, details wont matter to most.

  2. Nemesis | 4 December 2011 at 8:05 am | Reply

    [Ed McMahon backed by studio orchestra]

    And…. H-e-e-e-e-e-e-e-re’s….. Jinhai!

    “Forty percent is just the average drop in the national housing price. If referring to first-tier cities, I think the average drop will be over 50 percent. Some specific buildings and regions may even fall more. The reason why it will fall so much is that the speculation and investment demand has jacked up the price so much. Therefore, the housing prices must drop by a huge margin due to the fact that the country is hitting investment and speculative demand.” – Cao Jinhai/Economist, Chinese Academy of Social Sciences

    [BloomBerg] – Real Estate Prices Fall in China, Inciting Anger and Applause: Adam Minter

    http://tinyurl.com/6qxyd9p

    • Nemesis | 4 December 2011 at 8:44 am | Reply

      Hmmm. Evidently, the CCP Politburo is a ‘tad’ concerned about RE price declines, too…

      “It is an urgent task for us to think how to establish a social management system with Chinese characteristics to suit our socialist market economy with Chinese characteristics.” – Zhou Yongkang, CCP Politburo [at a seminar on “social management innovation”]

      [FT] – China to prepare for social unrest

      http://tinyurl.com/866lf9f

      • jesse | 4 December 2011 at 10:31 am |

        Socialist market economy with chinese characteristics? Mkay

        Sounds like a head of a dragon, body of a snake, reined by a technocrat searching for a chimera.

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