Last month we reported statistics from real estate adviser DTZ showing house sales in Chinese first tier cities plunged 64.6 percent in the month of February. Such a sizeable fall was expected to have an impact on prices.
Business China has now reported the prices of new homes in Beijing has fallen 26.7 percent month on month in March 2011. This is the first fall in new house prices in 19 months, and quite a sizeable one at that.
Moody’s investor service has today downgraded the outlook for China’s property sector to negative. It said “During the next 6-12 months, Chinese property developers will face challenges in securing debt financing, as the government enforces its strategy of slowing monetary growth to reduce the risk of accelerating inflation and to manage domestic banks’ exposure to the property sector,”.
Moody’s downgrade follows ratings agency Fitch who earlier this week downgraded China’s local currency debt rating to negative saying it “reflects concern over the scale of sovereign contingent liabilities and risk to macro-financial stability arising from the very rapid pace of bank lending in recent years, especially against the backdrop of rising real estate valuations and inflation.”
» Beijing Home Prices Drop for First Time in 19 Months in March – Business China, 12th April 2011.
» Moody’s downgrades China property sector to negative – Reuters, 14th April 2011.
» Fitch downgrades China’s yuan debt outlook to ‘negative’ – Agence France-Presse, 13th April 2011.
hehehe…hehe….he…he (with an “I knew it” smile)…good luck people…
I’ve got that negative equity kind of feeling coming on. I just can’t wait for it. I’ve just got the taste for it.
You’d be pretty pissed if you just committed to 20 or 30 years of debt slavery only to find out you were suckered in.
What does this mean for our export market of building raw materials….OMG
The Baltic Dry Index looks like it has fallen through the floor again.
Is Melbourne the next Beijing?
Alot of Chinese saving in Melbourne land bank so might be time to withdraw before the fortune cooky gets broken.
Deflation is a bitch if debt is involved.
GFC MARK II may have officially begun.
Sounds like the 64.5 million property investors who hold vacant apartments on the premise they only go up could be getting rather nervous.
The breakdown of the stats show around 90% of the transactions made in March were made by home buyers with actual demand. The proportion of non-local buyers of second homes in Beijing dropped by more than 40% to only 7.6% of total buyers. So it looks like the government policies are starting to work, and as they are here to stay, I doubt these numbers are statistical anomalies or will improve in the short term.
Speculation is no more in the Beijing property market.
Ironic how a corrupt pseudo-communist government has come to it’s senses and is now more economically responsible than our own government regarding property speculation.
This is only the beginning. China and Australia are about to go through the GFC like everyone else. The only thing is they are going to experience it even worst because they just put a band aid on it with the stimulus.