China's property market is beginning a collapse that will hit the banking system, Kenneth Rogoff of Harvard University told Bloomberg Television.
Property transactions have dropped and prices are stagnating in the wake of steps in recent months by the central government to cool the market. Xu Shaoshi, Minister of Land and Resources, said at the weekend that he expected prices to start falling within a few months.
"You're starting to see that collapse in property and it's going to hit the banking system," Rogoff, a former chief economist at the International Monetary Fund, told the agency. Not everyone agrees. Because home owners must make a down payment of at least 20 percent and many pay entirely in cash, there is relatively little leverage in the Chinese property market.
"Despite the importance of the property sector in the economy, we believe that the deflating of this bubble should have only a limited impact on the real economy and the banking system," Nomura's chief China economist, Sun Mingchun, said in a report.
But prices in Tier-1 cities such as Beijing and Shanghai had not yet declined, he said, so officials needed to step up implementation of the measures, which include higher down payments, the end of mortgage rate discounts, curbs on purchases of multiple homes and restrictions on lending to developers.
-Bloomberg
so? people say stuff on bloomberg all the time
like everyone, i don't know what's going to happen to the chinese property market, but i think most people on wall street are at least somewhat aware of the risks over in china
^^just like they were aware of the risks with the CMO's, pass through's, and the oil bubble?
Investors need a place to stick their money and so we have bad investments made all the time. This was discussed not to long ago about the excess capital and the lack of good entrepreneurship in the VC/PE space.
Nobody wants to return the investors' money and not collect fees. Bad ideas get more funding when there's a lack of good ideas.
nothing is going to happen to China's property market. When a country goes from people living in shacks to skyscrapers, property prices rise. Also, all the rich people want to live in the big cities and with 1.5 billion ppl there is more than enough customers.
Never make the mistake of using western style investment analysis on asian markets - (advice I once got from an mba professor who is regarded as the leading authority on business in china )
Take a look at this video and tell me China isn't juicing their GPA figures.
Towards the end of the video sounds exactly like the USA right before the bust.
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