When the House Prices Goes Down
By Jian Shuo Wang on 2005-07-14 00:36 · Real EstateIt seems the turning point of the Shanghai Real Estate has appeared. It seems to me that the price of real estate in Shanghai (one of the hottest topic) is turning down. Evidence: 1. The latest flyer I got from my mailbox about the price of the apartment was lower than the last quote - the first time in the last several years. 2. More and more real estate brokers closed their business because the limited transaction cannot support the rent. Interesting observation.
21 Comments
Do some not buy in fear of this or is it so rare that it's not a real worrry?
Do some not buy in fear of this or is it so rare that it's not a real worrry?
Posted by: Tom on July 14, 2005 04:20 AM
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I heard that US Supreme court OKs personal property seizures.
Detailed news:
http://edition.cnn.com/2005/LAW/06/23/scotus.property.ap/index.html
High court OKs personal property seizures
Majority: Local officials know how best to help cities
Friday, June 24, 2005 Posted: 0432 GMT (1232 HKT)
Manage Alerts | What Is This? WASHINGTON (AP) -- The Supreme Court on Thursday ruled that local governments may seize people's homes and businesses -- even against their will -- for private economic development.
It was a decision fraught with huge implications for a country with many areas, particularly the rapidly growing urban and suburban areas, facing countervailing pressures of development and property ownership rights.
The 5-4 ruling represented a defeat for some Connecticut residents whose homes are slated for destruction to make room for an office complex. They argued that cities have no right to take their land except for projects with a clear public use, such as roads or schools, or to revitalize blighted areas.
As a result, cities have wide power to bulldoze residences for projects such as shopping malls and hotel complexes to generate tax revenue.
Local officials, not federal judges, know best in deciding whether a development project will benefit the community, justices said.
"The city has carefully formulated an economic development that it believes will provide appreciable benefits to the community, including -- but by no means limited to -- new jobs and increased tax revenue," Justice John Paul Stevens wrote for the majority.
He was joined by Justice Anthony Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.
At issue was the scope of the Fifth Amendment, which allows governments to take private property through eminent domain if the land is for "public use."
Susette Kelo and several other homeowners in a working-class neighborhood in New London, Connecticut, filed suit after city officials announced plans to raze their homes for a riverfront hotel, health club and offices.
New London officials countered that the private development plans served a public purpose of boosting economic growth that outweighed the homeowners' property rights, even if the area wasn't blighted.
Justice Sandra Day O'Connor, who has been a key swing vote on many cases before the court, issued a stinging dissent. She argued that cities should not have unlimited authority to uproot families, even if they are provided compensation, simply to accommodate wealthy developers.
The lower courts had been divided on the issue, with many allowing a taking only if it eliminates blight.
"Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random," O'Connor wrote. "The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms."
She was joined in her opinion by Chief Justice William H. Rehnquist, as well as Justices Antonin Scalia and Clarence Thomas.
Armed Thugs Assault Villagers Opposed to Seizure of Property:
Hundreds of men armed with shotguns, clubs and pipes on June 11 attacked a group of farmers who were resisting official demands to surrender land to a state-owned power plant, witnesses said. Six farmers were killed and as many as 100 others were seriously injured in one of China's deadliest incidents of rural unrest in years.
The farmers, who had pitched tents and dug foxholes and trenches on the disputed land to prevent the authorities from seizing it, said they suspected the assailants were hired by corrupt local officials. They said scores of villagers were beaten or stabbed and several were shot in the back while fleeing.
Reached by telephone, a spokesman for the provincial government said he could not confirm or discuss the incident. "So far, we've been ordered not to issue any information about it," he said.
Large contingents of police have been posted around Shengyou, about 100 miles southwest of Beijing, but bruised and bandaged residents smuggled a reporter into the village Monday and led him to a vast field littered with abandoned weapons, spent shell casings and bloody rags. They also provided footage of the melee made with a digital video camera.
Despite the attack, the farmers remained defiant and in control of the disputed land. They also occupied the local headquarters of the ruling Communist Party, where they placed the bodies of six of their slain compatriots. A crowd of emotional mourners filled the courtyard outside; hanging over the front gate was a white flag with a word scrawled in black ink: "Injustice."
Residents said party officials abandoned the building and fled town, apparently because they feared they would be blamed for the killings.
"We want to know who gave the orders, who sent them to attack us," said Niu Zhanzong, 50, a bald, wiry farmer who made a video of part of the battle before men knocked him down, smashed his camera and broke his arm. "We hope the central government will come and investigate. We believe in party central, but we don't believe in the local police."
The seizure of farmland by local officials to build roads, dams, factories and other projects, often for personal profit, has emerged as an increasingly volatile issue in the Chinese countryside, where the government owns all land and gives farmers only long-term leases. Peasants often complain they are unfairly compensated when officials confiscate their plots, and have staged hundreds of protests over the issue in recent years.
The incident in Shengyou, a wheat- and peanut-farming village in central Hebei province, was unusual because the men sent to suppress the peasants appeared to be hired thugs rather than police, and because the conflict resulted in so many casualties.
Residents said the men arrived in six white buses before dawn, most of them wearing hard hats and combat fatigues, and they struck without warning, repeatedly shouting "Kill!" and "Attack!" Police failed to respond to calls for help until nearly six hours later, residents said, long after the assailants had departed.
Access to firearms is strictly regulated in China, but villagers said the men fired on them with hunting shotguns and flare guns. They also wielded metal pipes fitted with sharp hooks on the end. Because of the preparation, residents suggested the men might have ties to organized crime groups working with local officials.
The attack was first reported Monday in the Beijing News, a state-run tabloid known for testing party censors. The paper said one of the assailants died in the clash, and reported that authorities have already dismissed the party chief and mayor of the nearby city of Dingzhou, which governs Shengyou.
Officials in Dingzhou declined to answer questions, and managers of the Hebei Guohua Dingzhou Power Plant did not return phone calls.
........
http://www.progress.org/2005/emdom07.htm
Behind the robust trade surplus figures of China, you see the reported losses of Chinese companies shooting up dramatically this year. This tells you excess capacity and eroding profit margins are starting to take its toll. So in order to survive, the Chinese companies push for the export markets to get cash flow thus leading to strong export figures. But look at how imports from China have slowed substantially, signaling a slowing economy.
When the economy finally rolls over in 2006, China's overall trade surplus will shrink dramatically and may even turn into a deficit. And all those property owners/speculators who have bought at the top with leverage and are still holding on now will be forced to sell.
In a way, I'm glad that the government has finally come up with some rulings to intervene. Anybody who has been trying to buy properties in Shanghai, or some other Chinese cities, must be so fed up with frustrations not being able to find new properties to buy. I went with a girl friend early this year trying to purchase a flat in several complex. Every sales office we went to, we were told that every unit was sold out. One development in Jinan District was about to go on the market in late February. We went there, was told to register our names in a booklet. I asked whether that meant we're reserving a unit. The answer was no as no one could reserve any unit. They will be lotteried on 2/26, so just be there on that morning before 9. Then why bother putting your name down. What's strange was that the sales woman told us that 80% of the units were reserved. Wasn't that a contradiction of what she had just said?
Leaving the sales office, my friend and I went to a few real estate companies nearby. When we inquired about this complex, one sales man said, he has units on any floor with all types of floor plans. He even showed up Zeroxed copies of the floor plans. When we asked him the selling prices, he replied, " Just add 160,000-200,000(RMB) to the asking prices on the opening day(2/26). Will somebody tell me what these money is for, and for whom? I heard that this is a way developers hiked their properties by setting aside many units to sell through real estate agents.
That said, I am glad to know the recent government rulings have put a heavy dent on developers' sales. Indeed I heard many real estate companies are closing some of their sales offices to save money.
As to how much prices will come down and how long the down trend will last, that's anybody's guess. I don't think developers are hurt yet, not if they have reaped in loads of money during the past 2-3 years. My guess is that if many units remain unsold, whether from developers or from private home owners, by year end, we shall see prices coming down more drastically.
Properties in downtown area should be able to weather the price drops better than suburban areas or complexes with more than 30% of the homeowners being investors. In California, many lenders won't lend in a condo project that has more than 30 % of the units non-owner occupied. I don't know if it is till the case though as I moved out LA in 1993.
So folks, if you're planning to buy a flat, just hang on. It's going to be a buyers' market within a half year. People can at least pick and choose and netotiate the prices now. So let's wait and see.
I did some reaserch in Shanghai's property market and if you are interested, please read my article here from the following link. http://madaboutshanghai.blogs.com/mad_about_shanghai/2005/07/tightening_poli.html
I know that CHinese gov. is not as good as we wish. but on the other hand, China like a monster in your foreigners' eyes. Try to understand us would be more appropriate.
I don't think anyone was being critical of the government here. In fact, I believe that everyone is saying that the government has done the right thing by putting `the brakes on' a real estate market that was beginning to spiral out of control.
What the government has done is tried to stop the real estate prices moving out of reach of the average person, for this they should be congratulated!
Living in Sydney Australia, I can tell you how hard it is for people when property prices run up uncontrolled. Here we have seen property prices double in the last 3 - 5 years with no change in the income of the average home. This has meant that home ownership is just a dream now for many people. The Chinese government is trying to prevent that from happening, and they are starting to achieve their goal. The only thing they really need to watch out for is that investors do not get driven away, otherwise in the long term there will be a shortage of rental properties, which will drive up rental prices. This can only be bad, because there will always be people who rent - out of choice or necessity.
I don't know whom you were refering to as being critical to the Chinese government. Since I made a comment supporting the goverment recent rulings to intervene the exuberant spiraling housing prices, I don't think you were condeming me. If you did, then you aimed at the wrong person or you missed my points reading my lines.
On the other hand, you should not balk at foreigners for voicing the truth. It's not the foreigners who were criticizing the governmental policies. It's the Chinese media and consumers that have been giving all the feedbacks on the market conditions. Everything I had said simply relected what I had read about from the Chinese media.
Do you think the wealthy and powerful could be less greedy and less rotten if they read through www.tianyaclub.com/New/PublicForum/Content.asp?idWriter=0&Key=0&strItem=no04&idArticle=307871&flag=1
Do you think the wealthy and powerful could be less greedy and less rotten if they read through http://www.tianyaclub.com/New/PublicForum/Content.asp?idWriter=0&Key=0&strItem=no04&idArticle=307871&flag=1
People in Shanghai will not see a big drop of the real estate price until the local papers are INSTRUCTED to carry what I found in http://www.ehomeday.com/news/2005-7/2005714103842.htm
Do you think the wealthy and powerful could be less greedy and less rotten if they read through http://www.tianyaclub.com/New/PublicForum/Content.asp?idWriter=0&Key=0&strItem=no04&idArticle=307871&flag=1
Thanks for your reply to my comments. I have been living in Europe for the last three years. I know the house price doubled in this three years in the UK, which made a lot of young people have to struggle for many more years to get their own property. The same thing happened in China also made me uncomfortable. Since Chinese people could not have the ownership for their land, how could the property price went up so fast? What will after 70 years when their land-rental from Chinese government run out? I don't know the answer. I don't Chinese government know the answer either.
Government officers in China only aim short-term goals. because they will move to other positon after 3-5 years. of course they still will be officers. well, this will be a long story...
come back to why I am so angry for some of the comments. As I have living exprience in Europe, I notice a lot of people don't other countries much. Most news for abroad are bad news, like killing in mid-east/ train crushing in India/ flooding in China/ government cruption in China and so on. All this news made people only see the negtive part of other countries. Or people just like bad news?
When you come to CHina you will find a lot of positive things happen as well. You will know why we could not follow USA's "demacrocy". Iraq and Afganistan are enjoying it now and price is their oil.
As CHinese I could dislike my government, which I don't have the right to choose. But I love my country!
Love to discuss with you more. You can reach me by email: yzhang@ezfor.com, johnnynj2005@gmail.com
Cheers!
Democracy is good only when people in their own country fight for it themselves, not obliged by other nations especially like USA, which only carry it as a flag and use it as a legal cover to do whatever they want to do.
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The above is very true, the American media is ruled solely by ratings - they will not cover real news unless it will bring in ratings. They are slaves to shareholders and the almighty dollar. To really have a clue to what's going on, one must check many news services around the world, as well as blogs, etc. If you rely solely on U.S. news services, you are relying largely on propaganda.
BUT, as far as news is concerned, things in China are even worse. This is not a put down on the U.S. or China, just stating facts.
The same applies to a housing bubble!
:0)
bloody cheeky.
Garett Lee - Garett@Space.sh.cn for further info.
My view is that the government gave too high a priority to unemployment and social unrest, makng GDP growth its top priority. It also underestimated the amount of foreign direct investment coming in to the country with its entry in the WTO. Furthermore, serious misallocation of resources at the local level ( just total up the number of new airports and other major infrastructure projects) were not put in check creating unecessary competition and wastage. China must achieve sustainable growth and not growth at all cost ( eg. to the environment). Labour laws and restriction on work hours must be put in place so as to increase the standard of living of its workforce. The tax system must be much more efficient/simple (a low flat rate income tax) and the tax net widened so that government can increased its income dramatically without relying too much on land sales. In turn the standard of social services, education and healthcare should be improved to the poor thus giving them better opportunities to close the wealth gap which has become acute. They are the backbone of the country and count for a very large portion of the population. The salaries and benefits to public servants must reflect market realities otherwise corruption will not be eradicated and such dysfuntional behaviour will cost the nation even more in the long run both socially and in dollar terms(heavy penalties is not the only answer).
Wider selection of investment opportunites and transparency of those investment be it stocks, trust funds, retirement funds, reits, hedge funds etc. should be made available to the public. Regulatory bodies must play a more active and independent role in regulating such markets and must not bow to external pressure. Market confidence is the esssence to a healthy liquid market. Listing approvals should be independently evaluated on merit not national importance. The private sector must play a leading role in the transition from a planned economy to a market economy.
In short, the problem with the property market in Shanghai is part of a bigger problem that needs to be resolved.
http://homes.blogcn.com