House Market in Shanghai, Shenzhen, Rebounding, for Now
China's housing market is showing some signs of bounce. During the second week of March, the trading volume of Shanghai's commercial residential housing hit a new high for the past 70 weeks, equaling its level in October, 2007, when the housing market was at a peak. The housing market in Shenzhen has been climbing for three months.
Housing Market Faces Huge Inventories, Unrecouped Funds, and No Buyers
Demand has not disappeared in the real estate market, but most potential buyers, afraid that the housing prices will drop soon after their purchase, dare not take the leap. On the other hand, developers, anticipating macroeconomic and housing price rebounds, are unwilling to cut prices. Neither is budging.
In Shanghai, Falling Housing Lending Mirrors Falling Real Estate Market
Personal housing lending in Shanghai has been dropping month by month. According to a report released by the Shanghai Banking Regulatory Bureau on the real estate market and real estate credit in Shanghai in 2008, housing credit growth of domestic and overseas banks in Shanghai was 14 percentage points lower for the year.
Price War Developing Between Beijing Housing Builders
Huge inventory and depreciation pressures are triggering a new round of fierce competition in Beijing's housing market. After Vanke, China's largest residential real estate developer, further cut prices at the beginning of the year, other first-class developers, among them Zhujiang, Poly, and Coastal, have had no choice but to follow suit, and the capital is now witnessing a housing price war that must have buyers in a state of delight.
High-End Hotels Hit Hard Times in Shanghai
This indicates a crisis for high-end hotels in Shanghai and other big cities in China. Recently, The Regent Shanghai and The Plaza Royale Oriental Shanghai both rescinded contracts with their foreign partners. The Regent brand and Howard Johnsons under Carlson Hotels Worldwide have dropped away from the two hotels.
Shanghai's Office Space Rental on the Edge of a Cliff
Shanghai's recent skyscraper boom has become a source of troubles recently as multinational companies aggressively cut costs to survive the hard times. The commercial building vacancy ratio in Shanghai, especially in the Lujiazui Financial Zone, Pudong District, is rising, and rents are slumping.
The Ultimate Attempt to Rescue House Market, But T
The Chinese government is putting effort into its attempts to reverse the slump of the real estate market. Besides cutting transaction taxes, it is also now allowing developers with sound credit to issue debentures and real estate investment trusts (reits). This is the government's first clear funding support for developers in two years.
Latest Real Estate Rescue Efforts Not Enough, Again
The Chinese government is likely to see little effect from its latest measures to promote housing consumption, as they have not bettered policies of local governments across the nation. The real estate market slump, having already lasted a year and a half, seems a safe bet to continue.
US Housing Fire Sale Not a Good Enough Deal for Chinese Buyers
Anyway, now is not the right time to invest in US real estate. The market has not hit bottom and housing prices. Analysts say there is still about 15% to 20% decline room for the U.S. housing prices. This means that investment now will face potential losses.
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