Selling frenzy hits Chinese property

From Forbes comes an interesting story on the results of China’s recently announced new property curbs:

China is determined to poke holes in its housing bubble.  Nowhere is this attempt more forceful than in Shanghai, where the government introduced its first-ever property tax last year.

 

Something else is happening now in China housing.  Investors who buy homes as a store of value, rather than as a place to sleep at night, are rushing to their realtors before the government implements a 20% capital gains tax on housing sales.  Beijing introduced the new rule on March 1, but no one knows when it will go into effect.

“The new measures will have a significant impact on both demand and supply in the existing home market,” Lina Wong, a managing director at Colliers International, was quoted saying in Shanghai DailyTuesday.

…The latest ruling has sellers wanting out before it kicks in.  The number of homes on the market rose 30% in Pudong New Area, a high-end waterfront district in Shanghai.

…For the first 10 days of March, 412,000 square meters of new residential property were sold across Shanghai, China’s most expensive city. That’s been a year-on-year sales increase of 78.4%, according to Century 21 China Real Estate.

…In Beijing, some 9,400 homes were sold last week, up a mega 279.5% from the same period last year, the Beijing Municipal Commission said today.

Pre-owned home sales almost tripled in Beijing last week, following the latest moves by the State Council to reign in this property market. On a monthly basis, the figures represented a 140.5% increase on the previous week.

…A survey by SouFun Holdings Ltd, a real estate-focused website, said about one-third of potential home buyers had changed their home-purchase plans as a result of the tax.

Chen Li, a company executive living in Beijing’s Tiantongyuan area, was quoted saying in China Daily: “I did not plan to sell my apartment before the launch of the 20 percent taxation policy. But considering I may have to pay around 200,000 yuan ($32,100) tax once the policy is in place, I’d better make a deal right now.”

Houses and Holes
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Comments

    • Yep, but what about this, if it causes a crash or massive devalue what impact will it have on the mining industry since so much of it is used in construction in China ?

      • Oh, not to mention the fake wealth that many had in property that is going to vanish and that will hit local consumption.

  1. Obviously they’re selling up to free up cash for the value now found in the Australian property market.

    • They are selling up because of a %20 tax the government will impose on property in China. Check out the Shanghai stock market, dropping yesterday and today because of it.

  2. Deja vu ?

    Worth noting Gillem Tullochs forecast of a crash in second half 2013

    http://blogs.reuters.com/macroscope/2013/03/12/china-housing-bubble-will-pop-in-second-half-of-2013-forensic-asia/

    And of course Chanos is back out beating his drum.

    The 60 minutes special may have precipitated this as well – .

    My LONG term tin foil, conspiratorial, over the horizon view is that it is in the best interests of the Chinese government to cause a crash.

    WHOA WHAT !

    Yep – these massive ghost cities, over construction etc, would be immediately returned to the state which could instantly create vibrant cities by relocating whoever it needs. The power of a command state backed by capitalist economy is rarely understood.

    Shifting vast swathes of itinerant / migrant workers into these cities would also instigate the required boom in service industries required for this to occur, the surge in urban living would also reduce the Hukou disparity, provide a massive surge in government spending on Hukou services (hospitals, schools, public transport) and above all the urban consumer life style with apartment living would all assist in the shift from external export centric economy to a stronger domestic consumer society.

    All of this delivered off the back of a shifty, shadowy, non-existent banking sector in a society teetering on the edge through social unrest at the vast inequalities in wealth generated by the two decade boom.

    Smashing the housing boom, raising millions out of rural poverty, wiping out the shadow banking system, restoring social equity, restoring faith in the party, smashing the corruption, and instigating the greatest consumer boom in global history – win, win, win, win, win and WIN.

    But of course – that’s tin foil hat.

    • Lol. You’ll find good company at MB – there are a surprising number of tin foilers in the comments.

      • No Way 3 dingos 1 kanga

        We wear nothing but the very best stainless steel headwear pulled straight out of the Pilbara and made of course in China to exacting standards.

        Tin foil hats are so yesterday.

        Thankyou so very much Rio Tinto for allowing us ‘Tin Foilers’ to make a change for the better

      • There are billions involved. Fairly serious money.

        Most parents still desire that their offspring are capable, contributive and achieve some independence built upon personal ability.

        Just a parent rationing the kids.

      • “Most parents still desire that their offspring are capable, contributive and achieve some independence built upon personal ability.

        Just a parent rationing the kids.”

        Had to chuckle, is he talking about Lang the parent or Gina the parent?

        Anyway it does pose the question, would Lang consider Gina as acheiving some independence from Daddy? (Cough cough splutter……)

      • This should be in the links tomorrow – probably why our fine inheritenceer is trying to buy fairfax

    • Brilliant thesis, maybe not far from the truth? China is a casino but the Party always wins; they will always win because they make up the rules and stack things in their own favour – it’s not rocket science.

      People forget what we are dealing with – a totalitarian communist dictatorship. It’s not a capitalist economy and it never really has been – it’s a hybrid communist country with a (pretend) free market. Don’t think for a moment that the Party won’t re-assert authority over the middle class by compulsorily acquiring assets so they can redistribute them to the peasants… it has happened before in the history of communism. As you say, it’s win-win for them because they have a chance to lift tens of millions instantly out of poverty without having to actually pay for it themselves.

  3. The huge increase in volume is very interesting. Are vendors heavily discounting to achieve a quick sale or are there still plenty of buyers… every transaction has both a buyer and seller, so a selling frenzy is equally also a buying frenzy.

  4. Brilliant strategy, introduce a new tax but don’t announce any date for it take effect! lol

    • Helps motivate a move for the exit without creating a panic. Of course if not enough move for the exit then create panic is the next chapter of the playbook

    • And no date for it to take effect because the majority of officials (90%) are opposed to it and are on the Slow Boat.

  5. mmmm…Motivated vendors rather than encouraging hoarders of vacant land and dwellings.

    Can we get some of that action?

  6. I wonder if the momentum from this will carry right on onto the real McCoy crash that China is overdue to have?