"The Chinese housing market is clearly oversupplied, existing housing stock is sufficient for every household to own one home, and we are supplying about 15 million new units a year." said Gan Li, economist and professor at Southwestern University of Finance and Economics in Chengdu, Sichuan and at Texas A&M University in College Station, Texas.
Mr Li interviewed 28,000 households (100,000 individuals) and found that a third of households are involved in peer-to-peer lending with zero-interest loans among friends, or very high interest averaging 34%, viewed as the cost of credit for businesses and households excluded from the formal banking sector, creating the social class known as Fang Nu (Housing Slave). Hat tip to Zero Hedge.
The idea of buying a property with borrowed money didn’t become popular until 2004 when home prices in major cities started rising fast enough to compensate for interest payments, enticing buyers to borrow to buy property, said Liu Yuan, a Shanghai-based researcher at Centaline Property Agency Ltd., China’s biggest real estate brokerage. (ZH Source)
Richmond has an immigrant population of 60%, the highest in Canada. Richmond has 50% of residents identifying as Chinese, the city in North America with the largest proportion of Asians. More than half of its population is of Asian descent, many of whom immigrated in the early 1990s, mostly from Hong Kong, Taiwan, and Mainland China. (Wikipedia)
From the Vancouver Price Drop blog we have a typical example of a vendor chasing buyers down the slippery slope of price reductions unable to get in front of the slide.
In the Year of the Horse, the advice is to tighten your saddle. The bull has turned into a mule.