1/6
This seems pretty significant: according to a PBoC survey, "a majority of Chinese residents think home prices will stay unchanged or fall in the first quarter of 2022."
english.news.cn/20220102/873fb…
This seems pretty significant: according to a PBoC survey, "a majority of Chinese residents think home prices will stay unchanged or fall in the first quarter of 2022."
english.news.cn/20220102/873fb…
2/6
The Xinhua article provides the details: "56.7% of respondents expect home prices to remain flat during the first quarter, while 15.2% forecast a fall. Some 16.8% of respondents expect an increase in home prices."
The Xinhua article provides the details: "56.7% of respondents expect home prices to remain flat during the first quarter, while 15.2% forecast a fall. Some 16.8% of respondents expect an increase in home prices."
3/6
This matters because speculative markets rise mainly on expectations of further rises. For many years the main reason for buying hugely overpriced apartments in China's major cities was the expectation that prices could only go up.
This matters because speculative markets rise mainly on expectations of further rises. For many years the main reason for buying hugely overpriced apartments in China's major cities was the expectation that prices could only go up.
4/6
This was supported by the claim – repeated many times even, surprisingly, by well-known economists – that the real estate market in China was different from those of other countries because "the government will never allow real estate prices to decline".
This was supported by the claim – repeated many times even, surprisingly, by well-known economists – that the real estate market in China was different from those of other countries because "the government will never allow real estate prices to decline".
5/6
The problem is that once this expectation is undermined, the main reason for buying disappears, and there are increasing incentives to sell, especially in cases where owners don't live in their apartments and are carrying heavy debt burdens.
The problem is that once this expectation is undermined, the main reason for buying disappears, and there are increasing incentives to sell, especially in cases where owners don't live in their apartments and are carrying heavy debt burdens.
6/6
I am not yet willing to write off the property sector in 2022 because I expect Beijing and local governments will do whatever they can to stabilize it, but it is pretty clear that 2021 has broken the confidence in ever-rising property prices.
I am not yet willing to write off the property sector in 2022 because I expect Beijing and local governments will do whatever they can to stabilize it, but it is pretty clear that 2021 has broken the confidence in ever-rising property prices.
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