Young banker Yan Lei toured the tree-lined gardens, sculptures and fountains of Baoland East Garden, a new Shanghai apartment complex, but he did not buy, deciding instead to hold out for lower prices."Home prices in Shanghai have begun to fall, so why hurry to buy now?"
"Home prices in Shanghai have begun to fall, so why hurry to buy now?" said 30-year-old Yan. "The environment is ideal; the prices aren't," he added.
China's most expensive property market has been deflating since June, when new taxes aimed at speculators halted a six-year boom during which prices almost tripled. The slide may deepen as developers increase supply and demand wanes in a city where a typical new apartment costs more than 50 times the average annual income.
"Property prices in Shanghai have risen out of the reach of ordinary citizens," said Qiu Zhicheng, an analyst at Xiangcai Securities Co, who forecast prices will drop 10 per cent in the coming year. "It was only a matter of time until prices fell."
Home prices dropped by 7.9 per cent between June and October, according to the city government's Shanghai Home Index, which has not reported a more recent figure. The index more than doubled between December 1999 and May.
Slowing demand has prompted some developers to offer perks such as free plane tickets and air conditioners, while others are guaranteeing refunds in the event of further price declines a tactic used by Hong Kong developers after 1997, when the city's real estate prices slumped by 60 per cent.
Substitute your favorite bubble city for Shanghai and they will be saying the same thing all across America soon. Global liquidity seems to be drying up.
Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/
No comments:
Post a Comment