Peter Zihan has been on about this for q few years. Apparently Chinese have very little investing alternatives yo housing. So a tremendous amount of their personal wealth is wrapped up in housing. They sometimes/frequently band together to jointly purchase a property. And they were buying on speculation, pre-construction commitments.
This has led to there being an approximate 100% over supply of housing/apartments. If you have heard of the “ghost cities” this is what is being discussed.
Some on these projects were halted mid-construction and have languished in that state since. I read these incomplete projects are now being demolished as there is no hope, or need, for their completion.
Because the Chinese personal wealth is so completely tied up in housing projects a 30% or greater drop in housing prices eliminates a much larger portion of personal wealth compared to a similar event in the USA where our wealth is shared, on average, between housing and retirement investments and the stock/bond market.
On top it is now officially recognized that China’s population has topped out and is now falling , putting even more pressure on their wealth accumulation apparatus. It will he increasingly difficult to show even minor GDP growth in face of these challenges.
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Time to buy calls !
Peter Zihan has been on about this for q few years. Apparently Chinese have very little investing alternatives yo housing. So a tremendous amount of their personal wealth is wrapped up in housing. They sometimes/frequently band together to jointly purchase a property. And they were buying on speculation, pre-construction commitments.
This has led to there being an approximate 100% over supply of housing/apartments. If you have heard of the “ghost cities” this is what is being discussed.
Some on these projects were halted mid-construction and have languished in that state since. I read these incomplete projects are now being demolished as there is no hope, or need, for their completion.
Because the Chinese personal wealth is so completely tied up in housing projects a 30% or greater drop in housing prices eliminates a much larger portion of personal wealth compared to a similar event in the USA where our wealth is shared, on average, between housing and retirement investments and the stock/bond market.
On top it is now officially recognized that China’s population has topped out and is now falling , putting even more pressure on their wealth accumulation apparatus. It will he increasingly difficult to show even minor GDP growth in face of these challenges.