going to be an exciting week in china real estate markets another big developer probably missing a bond payment today, evergrande likely to formally hit default at some point this weekhttps://archive.is/qkINL
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also Official report coming out on property prices, believe as much of that as you like ive heard rumors of impending price controls in various cities which strikes me as darkly funny. like usually price controls in real estate are ceilings rather than floors you know
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im trying to imagine a world in which this makes things better. like usually price floors just result in overproduction /if you have a guaranteed buyer/. but here you dont afaik so it seems like this just prevents many sales from happening at all but
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to the extent chinese real estate is better viewed as an investment vehicle maybe this works in some way by making everything illiquid. dont have to mark down assets as depreciated or whatever even if you cant actually sell them and so you just kick the can down the road further
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this seems like a stretch to me and i dont think it works since as i understand it the model for most developers relies on high turnover of these properties, and freezing the market screws them harder maybe it makes households who own homes feel better. prevents fire sales? idk
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please read this thread as pure speculation and me trying to steelman their policy i dont understand how their markets work at a granular level my baseline hunch that theyre kind of fucked remains tho
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oh shit xi was (is?) trying to push through a property tax. note that previously this had not existed in china note this is functionally a bigass bite to the use of real estate as /the/ household store of value in chinahttps://www.wsj.com/articles/in-tackling-chinas-real-estate-bubble-xi-jinping-faces-resistance-to-property-tax-plan-11634650751 …
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Replying to @eigenrobot
Seems weird since, as I understand it, land "ownership" in China is formally structured as very-long-term leases from the government.
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