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this post was submitted on 29 Jan 2024
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So, the real estate market in China was over leveraged just - like it's been over leveraged in many other countries. Will be interesting to see how their c̶o̶n̶ ̶a̶r̶t̶i̶s̶t̶s̶, I mean their economists attempt to correct for it. Chances are, if it's happening there it'll start a domino effect on other over leveraged real estate markets.
Hard to say. Real estate has been weird in China for years since it's one of the few investment vehicles available to the masses. A collapse domestically could even push those with the ability to do so to move more of their money into overseas real estate, which could have the opposite effect. Regardless, it's a bad sign for the Chinese economy generally, especially given that Evergrande is only the first of what's likely to be a wave of real estate industry bankruptcies.
Was just going to say this. This will just shift money away from Chinese RE, probably into RE in the West.
I think they have fairly strict monetary controls to prevent that.
I spent a decent amount of time in China before COVID and the amount of semi finished husks of buildings was alarming. They definitely over-built and the piper is finally getting paid it looks like.
Not like "many other countries" but expectedly much worse: real estate has been de facto where most Chinese have been concentrating their wealth as "investment" in the absence of better local alternatives and the inability to invest abroad.
That's a good point.
How much money, exactly, do you think is in the US property market?
How much money, specifically, from the middle class?
The important figure isn't the total, but the fraction of GDP that goes into real estate, which is disproportionate in the case of China, for the reasons I mentioned, and more (another major one being the land leased by local governments to serve as their de facto revenue stream)