Public anger in China spreading as property prices drop [tr]

South China Morning Post ^ | October 11, 2018 | Mandy Zuo

[C19fan]

Chinese property developers can usually count on September and October to be their “gold and silver” months for sales, but this year turned out to be different.

Not only were their sales figures grim for September, but the seven-day national holiday last week also brought at least two fangnao incidents – when homeowners protest against price cuts offered by developers to new buyers.

These protests are often directed at sales offices, with varying levels of intensity – from throwing rocks to holding banners and putting up funeral wreaths. As home ownership has remained the most important channel of investment for urban households in China in the past decade, price cuts have become increasingly unacceptable and a cause for social unrest.

[C19fan]

I guess Chinese are unfamiliar with real estate bubbles.

[ExSES]

I guess Chinese are unfamiliar with real estate bubbles.

They will be educated soon.... I'm certain their real estate promoters have fed them a diet of "Buy Real Estate..., it ALWAYS GOES UP"..., just like here in the USA!

[PGR88]

Hu Xingdou, a Beijing-based economist, said despite China’s market-oriented reforms 40 years ago, investors still lacked respect for market and social rules.

Its still a top-down economy. The Government is involved, at some level, in every industry in China.

[Rockingham]

The government has a major spurt of liquidity hnderway, but buyers are hard to lure in when price cuts are anticipated. The government will soon have to buy up bad loans and distressed properties to bolster price levels.

[Zhang Fei]

[Its still a top-down economy. The Government is involved, at some level, in every industry in China.]

---

A big part of the problem is the fact that the government, which owns every sq inch of land in China, doled out 70-year leases in tiny parcels, as if China were Hong Kong. This pushed home prices up to the point that they are are 10x or more median incomes. The issue is - China has a population density of 376/sq mi vs Hong Kong’s 16,444/sq mi. China is less than 1/40 as densely populated as Hong Kong, yet conducted land sales as if it were a super-sized Hong Kong. The Party benefited while the plebes paid through the nose. That’s why the latter are unhappy.

China has half the population density of the UK. Its city skylines should look like Britain’s, with mostly low-rise housing developments. But in actual fact, China’s city skylines look like one Hong Kong after another, with vast sparsely-populated areas in between. Building vertically is very expensive, with maintenance costs to match. What the government is saving on infrastructure costs, every high rise-dwelling Chinese family has to shell out in maintenance costs on a recurring basis.