Two years ago business analyst Shaun Rein set famous short seller Jim Chanos straight when he said China’s real estate was worse than a thousand times worse than Dubai. Now Chanos has scaled down his prediction to ‘a bumpy road’, and this time Shaun Rein agrees, he writes in CNBC.
However, there are far more serious problems emerging in the real estate sector, and in general in China’s overall economy, than two years ago.
There has been a slowdown in manufacturing and housing prices. A closer look at the economy actually shows that Chanos is correct this time – there is a serious speed bump in China’s economic future but that a soft landing is the likely scenario.
Developers have been cutting prices on new homes because they have outstanding loans they need to pay. But prices for second hand units owned by individual investors have barely budged. Why? Homeowners are not panicking and their mortgages, if they have any, are not underwater.
In interviews with dozens of homeowners my firm conducted in the past several weeks, the majority expected a 10 percent plus price drop, but only a minority said they would sell if prices dropped that much. Less than 5 percent said they were rushed to sell. Over 90 percent said they would hold on to the units no matter how long it took prices to rebound.
- Luxury spending moves to smaller cities – Shaun Rein (chinaspeakersbureau.info)
- Only Europe can save Europe, not China – Shaun Rein (chinaspeakersbureau.info)
- Europe split on how to deal with China – Shaun Rein (chinaspeakersbureau.info)
- Global brands must to local to win – Shaun Rein (chinaherald.net)
- Relaxing money lending is the wrong policy – Shaun Rein (chinaspeakersbureau.info)
- Needed: a China-first strategy – Shaun Rein (chinaherald.net)