Wednesday, September 8, 2010

Bubble: 64 Million Vacant Properties In China

Xiao Wan bought a 65-square-metre apartment near the North fourth ring road in Beijing last year. He couldn’t even recall clearly the room layout but remembered it was the first decent enough apartment that he found fairly affordable. He hastily signed the purchasing documents, but has never lived there and does not plan to.

The 27-year-old lives with his friend near the third ring road in China’s capital city. He bought the apartment as an investment, which so far is panning out. “I bought it for Rmb15,000 ($2,214) per-square-metre; it now can be sold at Rmb25,000,” he said. “It’s good just having it.”

Wan is not alone. Many homebuyers nowadays in China consider their property assets as part of their long-term savings plan, as well as a hedge against inflation.

Why property? China’s tightly run financial system leaves only three places for its zealous savers to put their money. Bank deposits are one option. But they yield 2.25%, less than the 3.1% rise in May’s consumer price inflation. The equity markets are a second choice. But stocks have been performing poorly; Shanghai’s benchmark index was one of the world’s worst performers in the first half of 2010. (And the bond market is underdeveloped.) Even with its high transaction costs and manic price moves, property has become the preferred investment choice for everyone from young married couples to middle-aged factory workers trying to ensure their retirement.

Recent statistics show that there are about 64 million apartments and houses that have remained empty during the past six months, according to Chinese media reports. 


  1. A bubble in Chinese real estate. Yawn. Tell me something I don't knoe. Wake me up when it pops. I've been waiting 3 years for California to default/get bailed out.

  2. SHTF?
    China inflation:
    Inflation may have accelerated to 3.5 percent in August, based on the median estimate of 31 economists in a Bloomberg News survey, while the one-year deposit rate is 2.25 percent.

    Data including consumer prices and industrial output will be reported on Sept. 11 instead of the previously scheduled Sept. 13, the National Bureau of Statistics said in an e-mail today. Central bank and statistics bureau press officials weren’t immediately available to comment this evening.
    Investors are speculating that the central bank may raise the deposit rate to combat the erosion of savings by inflation, according to analyst Chen Jianbo.

    “The statistics bureau has almost never reported data on weekends before.

  3. 4:03am-True

    Although I have a feeling the feds have been the ones purchasing my state's bonds under the table to keep my state going.

    No large company would want to touch us yet we continue to sell the bonds???

    Sounds fishy...BUTTTTT beats having to shoot looters as the major cities riot...Off to Walmart/Costco I go this weekend...Time to stock up again.


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