The ghost towns of China: Amazing satellite images show empty cities

quadraphonics said:

{chinese} Housing prices have more than tripled in the last 6 years - you really think that income in China is going to keep up with that pace? If not, then the market is a bubble. ...

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With tripling every 6 years, No. price of housing is now about static - so not much point to your question. Do I think the rapidly rising REAL salaries in Chin will let them buy homes at American prices - Yes they already do. At French home prices? - probably in a few years. You view of what is a high home price per sq foot is distored by the exceptionally low US data - due in part to fact US houses tend to be large (lowers the per sq. foot cost) and because they are down ~1/3 from their peak.

Do you not think incomes in China will equal those in France in less than 5 years? - I do, but in part because I think France, like the US, will be in depression by then.

Here is list housing costs per square meter of the world’s 12 most expensive cities http://www.cnbc.com/id/29862382/The_World_s_Most_Expensive_Real_Estate_Markets?slide=2
No main land Chinese city even comes close to making the list. "Dirt cheap" compared to France is not a "bubble" - not with incomes climbing 10%/ year in purchasing power (and more when they Yuan is fully cut free from the dollar.)

“Li lives with his parents in a cramped 700-sq.-ft. apartment in west Beijing. … If he finds the right place—preferably a two-bedroom in the historic Dongcheng quarter, near the city center—he hopes to buy immediately. … In the last 12 months such apartments have doubled or tripled in price, to about $400 per square foot. …
Some Chinese are plunking down wads of cash for homes: Others are taking out mortgages at record levels. Developers are snapping up land for luxury high-rises and villas, and the banks are eagerly funding them. Some local officials are even building towns from scratch in the desert, certain that demand won't flag. And if families can swing it, they buy two apartments—one to live in, one to flip when prices jump further.
And jump they have. In Shanghai, prices for high-end real estate were up 54 percent through September, to $500 per square foot. From: http://www.msnbc.msn.com/id/3473390...headed-major-real-estate-bubble/#.Tp4YSpuAqU8

Now compare this “high end” $500/ sq. foot Shanghai price to others around the world shown on this map:
(You may need to use <ctrl> + or - to get size OK.)

Billy T said:

price of housing is now about static

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So you're construing the fact that the housing bubble has already hit a wall, to imply that there is no bubble? Or what - that the authorities managed to halt the bubble growth right as it got to the peak?

Billy T said:

Do I think the rapidly rising REAL salaries in Chin will let them buy homes at American prices

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Not really the issue - the question is whether they can actually buy the huge stock of recently-built homes at prices similar to (or greater than) what the speculators holding them paid to buy them. The rates that Chinese seem willing to pay for rent don't suggest that they can. Nor do the incomes that Chinese earn - the ratio of housing prices to income is five times the international average. So that REAL SALARY is going to have to rise very quickly for a long time, to bring that ratio back down out of "oh shit this is a bubble" range.

Billy T said:

You view of what is a high home price per sq foot is distored

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I don't see where I've said anything about what constitutes a "high" house price in any kind of absolute terms, nor where the question of cost per square foot. I don't think that either of those factors are relevant to the issue of a property bubble in China. I think you are making a conscious effort to change the subject to something that you have pretty graphs to include, and then projecting some pet talking point about America relative to China onto me.

The most relevant indicators are the ratio of property prices to household income, and the ratio of property prices to rent prices. These are both far out of the normal range. There's also the large number of vacant apartments and unperforming loans, the weak secondary market, the proliferation of real-estate divisions amongst industrial firms, and the high level of residential housing investment as a percentage of GDP (tripled in the last 10 years, and is now similar to that in the US at the peak of our own housing bubble).

These are concrete, quantitative indicators of problems. I'm not hearing anything on your end except hand-waving at the premise that standard of living is rising so quickly that it's inconceivable that housing could be overpriced. How about you take an actual quantitative look at the income trends, and show us when the ratio of housing price to income can be expected to come back down to a reasonable level?

Billy T said:

Do you not think incomes in China will equal those in France in less than 5 years?

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The median household income (i.e., the one relevant for assessing overall housing prices)? Not a chance. Even in the case where there's a nasty downturn in France and Chinese household income grows much more quickly than at present, it would still take a ton longer than 5 years. I don't think you've done the math on this. I think you've just picked up a few sexy trends (Eurozone troubles, growth in China) and run away with them in pursuit of this whole hyperbolic pet narrative of yours.

quadraphonics said:

... These are concrete, quantitative indicators of problems. I'm not hearing anything on your end except hand-waving at the premise that standard of living is rising so quickly that it's inconceivable that housing could be overpriced. ...

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Both your claims here are false. There is not one number in your post - only hand waving claims. In contrast my post has numbers for both Beijing rent ($400/ sq. foot) and even the high-end home prices in expensive Shanghai ($500/sq foot) plus 34 other prices per square foot in 34 other global cities!

Twisting the idiom: You are a very black pot calling a spotless white sink black!

For example: The most expensive city in the "Chinese bubble," Shanghai, has a price only 15% of the cost per sq. foot in Paris. I think the wages in Shanghai are about 30% now of those in Paris and certainly going up rapidly compared to France. Thus, if true already, it is twice as easy for the Chinese to pay for their "bubble prices" as for Parisians!

Yes, until recently prices per sq foot in China have been soaring at perhaps the world's fastest rate - That is what results from starting at a "dirt cheap" rate as you base of comparison. Also you must understand that for at least a decade, and still, saving money in a bank gave a negative real return so money went into real estate.

Furthermore, Chinese could not (and still cannot invest in stocks etc. with few exceptions but none outside of China). The local stocks they could invest in totally lack transparency are frequently very fraudulent and ALWAYS have at least two sets of books which differ by more than a factor of three. - one set is for the tax collector. "Communistic China" has ridiculously high official corporate tax rates. I forget the numbers, they are varied and complex, with bribe adjustments, but about on the order of 50% of profits must go to the government, or 100% if a SOE. The "tax books" cut this rate down to a plausible 15 to 20% or less.)

Thus investing in real estate is the only feasible way the typical Chinese with a little money can invest in practice. - The government owns almost all the land and its resources, but you can own the buildings on it or have life lease to use of your farm.

Been reading posts for a while now and finally registered to post! I honestly have to say that I am surprised at the responses to this thread! Being as Dumb as I am, the first thing I did was look at the pictures - they did not appear empty to me! Seemed to get a lot thinking going on in smarter people though!

“... In 20 years, China’s cities will have added 350 million people—more than the entire population of the United States today.”

“By 2025, China will have 221 cities with more than 1 million inhabitants—compared with 35 in Europe today—and 24 cities with more than five million people.”

“By 2030, 1 billion people will live in China’s cities… 170 mass-transit systems could be built…40 billion square meters of floor space will be built in 5 million buildings—50,000 of which could be skyscrapers.”

In other words, as China transforms itself from a nation of farmers to a nation of richer urban dwellers, the equivalent of 10 New York Cities will need to be built ..."

From Robert Hsu´s news letter of today