GZBILL Posted October 26, 2008 Report Share Posted October 26, 2008 (edited) I got a little snippet from the Chinese news this morning, that many Chinese people are waiting to buy homes because the Chinese government will be easing the requirements for home lending, and at the same time lowering the property tax. Several would-be buyers are waiting in the wings for this to happen. I am told that this is a sure thing. Now mind you, I'm not able to corroborate this as my wife was translating the news, but it is indeed something that appears on it's face to be some sort of stimulus package for Chinese citizens. Additionally, the anticipation of these new home-buying policies, appears to be having a positive affect on the Chinese stock market. It's true that the People's Bank is lowering the requirement of a 30% down payment to 20% for first-home buyers. It's not clear if this will apply to expats, though. They are also allowing banks to discount the interest rate by 30%. These new incentives have some conditions attached, though. I think one of them is that they only apply to those buying properties that are 70 m2 or less so this means it targets the lower income population. I would think that most Chinese people will not rush out to buy a house yet as they are waiting for the upcoming plunge in property prices first. Thanks for that information Bill. My wife and I have discussed the possibility of buying a house, perhaps in the latter part of next year. I wonder if there would be any advantage in leaving me, as an expat out of the contract, and having her make the deal? Do you know whether the Chinese government would allow that? Then again, I guess I may have to be in the picture, as it would be my income. I haven't looked into this at all, but it might be a good deal for us to buy rather than rent. There is no advantage to leaving you off the purchase contract. In cases where one purchaser is Chinese and the other an expat, the law views the transaction as though you, too, were Chinese. There are two actual processes involved in the house purchase. One is the actual purchase contract itself. Even though it is your money, you don't need to be involved. The second is the mortgage. Your wife will have to substantiate a certain amount of income. If she can meet that on her own, then you do not need to be involved. If she cannot, then you would probably have to be a co-applicant (as distinguished from co-purchaser). Being a co-applicant does not place you on the title. There is, however, a disadvantage, but not in the way that some would guess. Whether or not your name is on the title, a spouse owns, by default, 50% of whatever property is acquired during the marriage. The disadvantage comes when you want to apply for permanent residency. If your name is on the title (either as purchaser or co-purchaser), it makes satisfaction of the "stable residence" requirement much, much easier. Edited October 26, 2008 by GZBILL (see edit history) Link to comment Share on other sites More sharing options...
tsap seui Posted October 26, 2008 Report Share Posted October 26, 2008 I got a little snippet from the Chinese news this morning, that many Chinese people are waiting to buy homes because the Chinese government will be easing the requirements for home lending, and at the same time lowering the property tax. Several would-be buyers are waiting in the wings for this to happen. I am told that this is a sure thing. Now mind you, I'm not able to corroborate this as my wife was translating the news, but it is indeed something that appears on it's face to be some sort of stimulus package for Chinese citizens. Additionally, the anticipation of these new home-buying policies, appears to be having a positive affect on the Chinese stock market. It's true that the People's Bank is lowering the requirement of a 30% down payment to 20% for first-home buyers. It's not clear if this will apply to expats, though. They are also allowing banks to discount the interest rate by 30%. These new incentives have some conditions attached, though. I think one of them is that they only apply to those buying properties that are 70 m2 or less so this means it targets the lower income population. I would think that most Chinese people will not rush out to buy a house yet as they are waiting for the upcoming plunge in property prices first. Thanks for that information Bill. My wife and I have discussed the possibility of buying a house, perhaps in the latter part of next year. I wonder if there would be any advantage in leaving me, as an expat out of the contract, and having her make the deal? Do you know whether the Chinese government would allow that? Then again, I guess I may have to be in the picture, as it would be my income. I haven't looked into this at all, but it might be a good deal for us to buy rather than rent. There is no advantage to leaving you off the purchase contract. In cases where one purchaser is Chinese and the other an expat, the law views the transaction as though you, too, were Chinese. There are two actual processes involved in the house purchase. One is the actual purchase contract itself. Even though it is your money, you don't need to be involved. The second is the mortgage. Your wife will have to substantiate a certain amount of income. If she can meet that on her own, then you do not need to be involved. If she cannot, then you would probably have to be a co-applicant (as distinguished from co-purchaser). Being a co-applicant does not place you on the title. There is, however, a disadvantage, but not in the way that some would guess. Whether or not your name is on the title, a spouse owns, by default, 50% of whatever property is acquired during the marriage. The disadvantage comes when you want to apply for permanent residency. If your name is on the title (either as purchaser or co-purchaser), it makes satisfaction of the "stable residence" requirement much, much easier. Looks like not having my name on the title to our new home is gonna make have to jump through more hoops for permanent residency. Oh well, I feel like I've been jumpin' through hoops all my life anyhow...some of the hoops had rings of real fire on them. If'n I have any problems, I guess we'll be going out to eat, drink, sing, and pass the loot...to somebody. tsap seui Link to comment Share on other sites More sharing options...
GZBILL Posted October 26, 2008 Report Share Posted October 26, 2008 (edited) Looks like not having my name on the title to our new home is gonna make have to jump through more hoops for permanent residency. Oh well, I feel like I've been jumpin' through hoops all my life anyhow...some of the hoops had rings of real fire on them. If'n I have any problems, I guess we'll be going out to eat, drink, sing, and pass the loot...to somebody. tsap seui Even jumping through hoops might not get you past the "stable residence" requirement. And the song & dance routine will not help. PR is approved only at the Ministry of Public Security level in Beijing and they probably would need, if you can even get to them, more than a few warm beers and a chou dofu dinner. Edited October 26, 2008 by GZBILL (see edit history) Link to comment Share on other sites More sharing options...
tsap seui Posted October 26, 2008 Report Share Posted October 26, 2008 Looks like not having my name on the title to our new home is gonna make have to jump through more hoops for permanent residency. Oh well, I feel like I've been jumpin' through hoops all my life anyhow...some of the hoops had rings of real fire on them. If'n I have any problems, I guess we'll be going out to eat, drink, sing, and pass the loot...to somebody. tsap seui Even jumping through hoops might not get you past the "stable residence" requirement. And the song & dance routine will not help. PR is approved only at the Ministry of Public Security level in Beijing and they probably would need, if you can even get to them, more than a few warm beers and a chou dofu dinner. Oh well Bill, the america government won't let the lil' rabbit go to america, it's only fitting that the Chinese get their turn with the "baseball bat" too. Maybe, if it's even possible, I can get my name on the house. Lord knows, the Chinese police have already visited her and investigated where all the money going into her bank account was coming from, and they've seen the house documents as proof of where a good portion of the money was going to. With what we've been through already, it's just not something I find worth getting worried about at this point. I'll just go over in a couple of months, get married, and see what hoops they have in place for a guy to live with his woman in China for a few years. I like your "to the point" sage wisom on life in Chinatucky. We plan on a 3 year stay in China before trying a DCF. If the second attempt for a visa fails, then, if we haven't already sold the house, we'll do that, and get one with my name beside hers on the title. tsap seui Link to comment Share on other sites More sharing options...
IllinoisDave Posted October 26, 2008 Report Share Posted October 26, 2008 I would think that most Chinese people will not rush out to buy a house yet as they are waiting for the upcoming plunge in property prices first. That's what I read...The BIG DROP is coming next spring... So does that mean that we should try to unload my wife's property (an apartment) in Shenzhen now if she can find someone to buy? If we wait will we be SOL? Will prices go back up after they hit the bottom making it worth hanging onto for the long term? I think markets such as Shenzhen still have a ways to drop before hitting bottom, but that's without government intervention. I'd say if the house is 90 m2 or less, hang onto it. There's a chance it may actually increase in value. The government has indicated that it will take whatever steps are necessary to shield the property markets from devastation, but there is only so much they can do. It's highly likely they will take measures designed to protect that sector of real estate more inclined towards the masses than for the more well off. If you have a house that is 100 m2 or more, that might be one of the ones that will be hit harder. If you can rent it out for a semi-decent price, that might be a good option, but even the rental market in Shenzhen is very weak currently. It's a tough call and a lot depends on a lot of factors known only to you and your current financial position.Thanks Bill. I'll have to ask my wife how big it is and come up with a plan. Like you said, financial considerations here may dictate what we do there. Link to comment Share on other sites More sharing options...
rogerluli Posted October 26, 2008 Report Share Posted October 26, 2008 Hey if the guvmint really wants to pump up the housing market in China... I HAVE THE SOLUTION... Allow foreigners unrestricted access to buying houses... A simple move that would flood the market with house buyers... (and pump up the values of our houses conincidentally... ) And help out Dave too... China doesn't view foreigners in the same way the US does. The US allows just about anyone that has the money to buy what they want, and where they want. It isn't so in China. Being a foreigner in China limits you in just about every way you can imagine. China is very careful to keep it economy under control, and takes a dim view of foreign investment. Actually, allowing expats unrestricted access to the property market would not help China currently. The main reason why restrictions are in place is not because of the property market per se, rather than it was a haven for "hot" money. There are limitations on expats living in China, but for the most part I don't think they are too unreasonable. In fact, in many aspects the restrictions here are far less severe than those on expats living in the US. Well we'll be finding out about that up close and personal since we will both be USC by the time we "try" to live in China... Link to comment Share on other sites More sharing options...
rogerluli Posted January 2, 2009 Report Share Posted January 2, 2009 Some more recent moves by the government to try to kick start the moribund housing market in China include reducing the length of time from 5 years to 2 in which you can sell without an extra tax and making the sale tax only apply to your profit on the house not the entire sale price...These moves are only for 2009 as of now... Although it seems many buyers are still waiting for an additional 30 - 40% drop in the major cities... Will it happen??? Link to comment Share on other sites More sharing options...
Tony_onrock Posted January 6, 2009 Report Share Posted January 6, 2009 Some more recent moves by the government to try to kick start the moribund housing market in China include reducing the length of time from 5 years to 2 in which you can sell without an extra tax and making the sale tax only apply to your profit on the house not the entire sale price...These moves are only for 2009 as of now... Although it seems many buyers are still waiting for an additional 30 - 40% drop in the major cities... Will it happen??? Depends on the city. We just commissioned a market study on the residential housing market for our internal purposes and will keep you guys posted. For investment purposes, I would still bet on Shanghai and shy away from the Pearl River Delta. Rules on foreign investment in real estate, including individuals are relaxed now. We are one of the largest foreign players on the market now after the other ones pull out. The market will follow the economic recovery and that recovery will more likely start from Shanghai, a commerical and financial center. Pearl River Delta is going through industrial structure change which can take much longer. Just my two cents. Actually villas will do better than small size apartments. The government is pouring too much money and building too many affordable housing as part of the economic incentive package. This will push up the supply and inventory and dampen the prices. On the other hand no new villas will be approved. That will limit the supply. Also for large villas, the total price is much higher. The price drop is more significant. In Shanghai Xintiandi, some of the apartments are selling at 35,000 psm now. It has to go up significantly. Another city to watch is Beihai, Guangxi Province. It is a coastal city with nice beach. There were unbelieveable speculation in 2007 and early part of 2008 in that market. Thus far the prices have not dropped much but I expect it to have a over correction in 6 to 9 month time when the speculators feel the squeeze in liquidity. Link to comment Share on other sites More sharing options...
rogerluli Posted January 6, 2009 Report Share Posted January 6, 2009 That's very interesting about villas... Please do keep us posted on any housing info you can share... Link to comment Share on other sites More sharing options...
IllinoisDave Posted January 6, 2009 Report Share Posted January 6, 2009 Please do keep us posted on any housing info you can share... What Rog said. Especially Shenzhen and Shanghai. Link to comment Share on other sites More sharing options...
Bill and Linda Posted January 7, 2009 Report Share Posted January 7, 2009 .... In Shanghai Xintiandi, some of the apartments are selling at 35,000 psm now. It has to go up significantly. ......I guess my purchase of a new condo in Chengdu at 5500rmb/sm last July was a good deal, then. Top notch complex being built by Vanke, great location, too. Link to comment Share on other sites More sharing options...
GZBILL Posted January 9, 2009 Report Share Posted January 9, 2009 .... In Shanghai Xintiandi, some of the apartments are selling at 35,000 psm now. It has to go up significantly. ......I guess my purchase of a new condo in Chengdu at 5500rmb/sm last July was a good deal, then. Top notch complex being built by Vanke, great location, too. Prices in Shanghai and Beijing are dropping. One of the areas in Beijing that traditionally commanded high prices, Chaoyang District, now has a glut of houses on the rental market and few takers. Rents are dropping. It used to be that 25k / m2 was the norm, but now new properties are steeply discounted and 19k / m2 is easy to come by. Unless you're looking to buy poor people housing (< 70 m2 in far out areas), I'd hold off. Link to comment Share on other sites More sharing options...
Tony_onrock Posted January 12, 2009 Report Share Posted January 12, 2009 .... In Shanghai Xintiandi, some of the apartments are selling at 35,000 psm now. It has to go up significantly. ......I guess my purchase of a new condo in Chengdu at 5500rmb/sm last July was a good deal, then. Top notch complex being built by Vanke, great location, too.It is easy to find out. You can find comparables pretty easy. The one I bought is next to the 3rd ring, coner unit on 6th floor, with one side facing the villas, one side facing the river and one side facing the court yard. Per title cert. the price is 4000/sqm (107 Sqm) but actual area is 127 Sqm(thus the effective price is reduced to 3100/sqm). Comps are selling at around 4000-5000 range. In the current market the only thing I would buy is where 1) I know the financial strength of the developer ( we control the cash flow of this particular one) and 2) the price is below market.If it is a fire sale and the apart is not finished (typical situation) one has to wath out for bankruptcy risk. The general consensus is that the price will drop further. The financial crisis is not yet felt by the middle class, the main body of buyers on the property market. Sale are slow because of anticipation that prices will drop further. So if the price is right, sales immediately go up. The property is that after the Chinese new year, about 70 million migrant workers are not returning to the city and bankruptcy in manufactoring will speed up causing more migrant workers losing jobs. Layoff at white collar level will take place a bit later than the blue collar mirgant workers. At that time, the pockets of buyers are squeezed (rather than currently only mentally affected). The market will feel it. The government stimulus, building cheap housing will further dampen the low end housing market by introducing additional (huge) competition that are not in line with the market. Things will improve later as housing starts are grinding down to zero basically. When supply dry up (other than low income housing), prices will pickup. Even on low income housing side, central government wants local government to build, but local government wants to buy from existing stock of developers. For local governments, 35% to 70% of the revenue come from land sale (depeding on city). Depressing the housing market by further glutting it with government build low income housing does not generate a dime of tax for them (except for bribes), but will kill the land auction market. Right now no city dare to acution off land unless the price and buyer has been fixed. So the landscape is quite mirky. The best strategy is to hold off, unless in my case where I know the price offered is 20% below market (as management incentive). Link to comment Share on other sites More sharing options...
Tony_onrock Posted January 12, 2009 Report Share Posted January 12, 2009 As far as Guangzhou and Shenzen is concerned, i would not touch that market. True prices have dropped quite a bit. So has demand. It may turn out to be the rust belt of China in a structual adjustment. No one knows how the structual adjustment will happen, but garment factors, toys, shoes and other labor intensive industries are dying for sure. China is no longer competitive in these areas. I would pay closer attention to Shanghai and buy here. Prices need to drop 20% more. We are following a few developments and watching the price. In a recovery Shanghai will pick up first. The demand is here, supply quite limited. I would be careful about Beijing. The price, as well as supply went out of line in anticipation of the Games and it is feeling the reality. Link to comment Share on other sites More sharing options...
Guest ShaQuaNew Posted January 12, 2009 Report Share Posted January 12, 2009 As far as Guangzhou and Shenzen is concerned, i would not touch that market. True prices have dropped quite a bit. So has demand. It may turn out to be the rust belt of China in a structual adjustment. No one knows how the structual adjustment will happen, but garment factors, toys, shoes and other labor intensive industries are dying for sure. The world economy has changed, but it's not dying. True, many factories in the Shenzhen area have closed, or significantly reduced headcount, but the markets are far from dead or dying. A good business will adapt to changes, whether they come fast, or whether they come slow. Shenzhen represents an ideal logistical location, which is what contributed to it's boom in the 90s. China is no longer competitive in these areas. Hardly true. China remains the most competitive manufacturer in the world for consumer products. However, everyone in the world is watching their wallets, so buying has been reduced, which forces production to respond. I would pay closer attention to Shanghai and buy here. Prices need to drop 20% more. We are following a few developments and watching the price. In a recovery Shanghai will pick up first. The demand is here, supply quite limited. I would be careful about Beijing. The price, as well as supply went out of line in anticipation of the Games and it is feeling the reality. Hard to predict exactly when or where any economic recovery will begin or thrive. Your suggestion that it will begin is Shanghai seems quite premature. Link to comment Share on other sites More sharing options...
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