Cross-posted from Investing in Chinese Stocks.
Last month news broke of Beijing residents lining up to transfer property at the registry of deeds (Transaction Tax Cut Spurs Bubble Activity in Beijing: ￥1000 For Reservation Number) and now the scalper’s price for a reservation number has doubled from around 1000 yuan to 2000 yuan.
In early March, the real estate registration center in the Chaoyang District, Beiqing Bao reporter learned that number here queued from 6am began. Basically every morning can be discharged from the ranks of tens of meters long. Haidian District office center hall, in order to be able to successfully run the next day on the transfer, members of the public 19:00 to line up, and even the number of cattle began to sell at high prices. Members of the public who are not accomplishing several trips to reflect the transfer, but the traffickers called to tell him to pay 2000 yuan can be immediately after finishing.
…Taobao station, charge d’affaires “sunrise mortgage transfer reservation,” the owner said, the number of transfer agent price of 1,500 yuan. Real Estate Registration online booking prompted, the system every Friday morning at 8 o’clock, the reservation number issued next week, currently No. 400 issued every working day a week, a total of 2000 number, expiry date. iFeng: 北京不动产过户行情火爆 黄牛倒卖过户预约号
Each district is taking measures to deal with the surge in registrations and cut the scalpers out. Haidian requires real name registration for a reservation number, Xicheng increased the number of people served each day, Shijingshan is using WeChat to let people reserve online.
The top tier city bubble is wildest in Shenzen:
Moreover, with a capital leverage off together with soaring housing prices. For example, Shenzhen, buy a house for ten million yuan, 20 percent down payment is 5 times leverage, and take that 20 percent or 200 million, borrow off market yup to 180 million, that is to say, with 200,000 yuan leveraged to 10 million yuan is equal to 50 times leverage, far more than the US sub-prime leverage!
If, according to media reports, the financial part of the Internet company launched the “down payment loan” financial products, such products can provide several hundred thousand dollars for the purchase, unsecured credit loan funds discretionary. Obviously, this kind of financial model through the Internet “plus leverage” in the purchase of the way, and then the US “subprime” really exactly the same, which greatly increases the risk of real estate finance ……
Technically, with zero downpayment and negative amortization, there were cases of infinite leverage…but the point stands.
Down payment loans are nothing new in China. Previously, credit guarantee and microlenders would offer these lows to low income customers so they could buy a home.
Many industry insiders told reporters, in fact, down payment loans already exist, buyers can get a variety of channels down payment financial services. Launched a P2P platform down payment loan executives told the “China Economic Weekly” correspondent, launched in addition to the down payment loan P2P platform, real estate agent can be obtained through self funding ends and cooperation with P2P platforms down payment loans to their customers, small loans companies by large loans and other consumer credit products to address the demand for loans down payment, the bank launched the large credit card, consumer loans are also large down payment to meet the demand for loans.
Yes, people can make a down payment with a credit card.
What P2P lenders did was increase the turnover and visibility of down payment loans. What was done for years behind the scenes became known to everyone via the Internet.
A joint-stock bank account manager told reporters, banking regulations do not allow the customer to provide a down payment loans, but different for each client manager channels, buyers of customer resources and relevant experience Account Manager illegal operations are normal, sometimes look a large amount of money involved is not. For large credit cards, consumer loans whether it will involve large down payment loan business, the manager said that this is similar to one kind of walking a fine line, if the buyers by a similar product to obtain funds for a down payment, the bank is also known. Sina: 首付贷早已存在 P2P成典型或因平台操作不规范
Banks, credit guarantee firms, consumer credit, black market lenders, family and friends, and on and on.
P2P lenders mainstreamed the practice, but they didn’t invent it. But now it’s banned so we’ll see what impact that has. More is coming, from Reuters: China Resources Land says top cities may take steps to steady housing market
State-backed property developer China Resources Land Ltd on Monday said local governments in the country’s top-tier cities may introduce partial short-term tightening measures to tame an overheating housing market.
And iFeng: 全国楼市“高烧”将退 暴涨城市房价或将回落:
First-tier city home prices may fall
Cause I love my family group vice president Hu Jinghui analysis, in February the central fiscal policy, monetary policy, two-pronged approach, the continuous introduction of a number of favorable policies from many down payment, interest rate, deed tax, business tax and other property for the property market, especially second and third tier cities, effective stimulated the demand for property, boosted market confidence, so in February new home prices have more second and third tier cities turned up by the fall, the national new homes property market, the overall trend of recovery, while second-hand housing market is more mature and cities some second-tier cities in the second-hand housing prices are rising.
Hu Jinghui said that in February prices continued to rise at the same time, we should also see housing prices in Shenzhen vanguard of new and existing homes, home prices began to fall than rise, indicating that some time ago soaring prices of cities, especially in Shenzhen being taken curb speculative investment, curb housing prices move has been noticed. Expects the future with the further withdrawal of investors, the Shenzhen property market will be the first cool down, prices finished lower, or will, immediately after Shenzhen, housing prices in Shanghai, Beijing, Guangzhou and other first-tier and second-tier cities focus will gradually stabilize, and some pre-Rate regional soaring, housing prices may pullback.
Finally, SCMP: A chill descends over Shenzhen’s formerly red-hot housing market
Total transactions by area in the nation’s most expensive city decreased 24 per cent to 89,400 square metres last week over the prior week, and fell 10 per cent year on year, according to China Index Academy. That compares to at least 25 per cent year on year growth in three other first-tier cities of Beijing, Shanghai and Guangzhou.
