China home prices soar

[Guest Tony n Terrific]

The economy is booming in China however many of the young in China are finding it difficult to have a roof over their heads. Price of home have soared where it now takes 60-70% of a person income just meet their mortgage payment. The bubble is growing and when it pops there is going to trouble in China.

 

http://www.washingtonpost.com/wp-dyn/conte...0021700265.html

[GDBILL]

The economy is booming in China however many of the young in China are finding it difficult to have a roof over their heads. Price of home have soared where it now takes 60-70% of a person income just meet their mortgage payment. The bubble is growing and when it pops there is going to trouble in China.

 

http://www.washingtonpost.com/wp-dyn/conte...0021700265.html

 

I remember when the bubble burst in Hong Kong. It was not a pretty picture.

Edited February 17, 2010 by GDBILL (see edit history)

[Stone]

This may not be directly related. But many experts are saying Chinese yuans are under-valued by 25-40%. But if they let yuans rise 40% (in 5-10 years), it will be a huge problem for U.S. citizens who plan to retire in China, because the U.S. income from pension souces will not go far in China when converted to yuans.

[ShaQuaNew]

All we need are a few sharp needles and let the popping begin. Course, this kind of popping is a lot more fun!

 

http://i50.tinypic.com/mvti0x.jpg

[GDBILL]

This may not be directly related. But many experts are saying Chinese yuans are under-valued by 25-40%. But if they let yuans rise 40% (in 5-10 years), it will be a huge problem for U.S. citizens who plan to retire in China, because the U.S. income from pension souces will not go far in China when converted to yuans.

 

 

But it will be a gift from heaven for those who work in China and have their US$ salary pegged at a rate of 8.3 RMB per dollar.

[a2784]

This may not be directly related. But many experts are saying Chinese yuans are under-valued by 25-40%. But if they let yuans rise 40% (in 5-10 years), it will be a huge problem for U.S. citizens who plan to retire in China, because the U.S. income from pension souces will not go far in China when converted to yuans.

 

 

But it will be a gift from heaven for those who work in China and have their US$ salary pegged at a rate of 8.3 RMB per dollar.

Why would they be pegged to 8.3 RMB/dollar?

[Guest Tony n Terrific]

This may not be directly related. But many experts are saying Chinese yuans are under-valued by 25-40%. But if they let yuans rise 40% (in 5-10 years), it will be a huge problem for U.S. citizens who plan to retire in China, because the U.S. income from pension souces will not go far in China when converted to yuans.

 

 

But it will be a gift from heaven for those who work in China and have their US$ salary pegged at a rate of 8.3 RMB per dollar.

Why would they be pegged to 8.3 RMB/dollar?

That was 5 years ago. 8.28 vs $1

 

http://www.x-rates.com/d/CNY/USD/hist2005.html

[ShaQuaNew]

The economy is booming in China however many of the young in China are finding it difficult to have a roof over their heads. Price of home have soared where it now takes 60-70% of a person income just meet their mortgage payment. The bubble is growing and when it pops there is going to trouble in China.

 

http://www.washingtonpost.com/wp-dyn/conte...0021700265.html

 

Most Chinese people don't get mortgages. They pay cash for the complete price of their home. This includes young and old alike.

[Stone]

This may not be directly related. But many experts are saying Chinese yuans are under-valued by 25-40%. But if they let yuans rise 40% (in 5-10 years), it will be a huge problem for U.S. citizens who plan to retire in China, because the U.S. income from pension souces will not go far in China when converted to yuans.

 

 

But it will be a gift from heaven for those who work in China and have their US$ salary pegged at a rate of 8.3 RMB per dollar.

Why would they be pegged to 8.3 RMB/dollar?

 

What GDBill was trying to say (as I guess) is that for U.S. citizens who are now working in China, their Chinese yuan earnings (and assets in China) will be worth much more when converted to dollars, with anticipated yuan rise. They may have the option to come back to the States and retire here.

 

Example:

 

Let's say you bought a nice apartment in China for 680,000 yuans (or $100,000 equivalent). After 5-10 years, the price of your apartment rise to 1,000,000 yuans. But the exchange rate also changes to $1 = 5 yuans due to yuan appreciation. So your apartment will be worth $200,000, twice the original costs in dollar terms.

Edited February 18, 2010 by Stone (see edit history)

[Stone]

This may not be directly related. But many experts are saying Chinese yuans are under-valued by 25-40%. But if they let yuans rise 40% (in 5-10 years), it will be a huge problem for U.S. citizens who plan to retire in China, because the U.S. income from pension souces will not go far in China when converted to yuans.

 

 

But it will be a gift from heaven for those who work in China and have their US$ salary pegged at a rate of 8.3 RMB per dollar.

Why would they be pegged to 8.3 RMB/dollar?

 

What GDBill was trying to say (as I guess) is that for U.S. citizens who are now working in China, their Chinese yuan earnings (and assets in China) will be worth much more when converted to dollars, with anticipated yuan rise. They may have the option to come back to the States and retire here.

 

Example:

 

Let's say you bought a nice apartment in China for 680,000 yuans (or $100,000 equivalent). After 5-10 years, the price of your apartment rise to 1,000,000 yuans. But the exchange rate also changes to $1 = 5 yuans due to yuan appreciation. So your apartment will be worth $200,000, twice the original costs in dollar terms.

 

Of course, the above example presumes that home prices in China will continue to rise. There are few investment alternatives in China. That is why a lot of "hot money" is pouring into properties.

[GDBILL]

This may not be directly related. But many experts are saying Chinese yuans are under-valued by 25-40%. But if they let yuans rise 40% (in 5-10 years), it will be a huge problem for U.S. citizens who plan to retire in China, because the U.S. income from pension souces will not go far in China when converted to yuans.

 

 

But it will be a gift from heaven for those who work in China and have their US$ salary pegged at a rate of 8.3 RMB per dollar.

Why would they be pegged to 8.3 RMB/dollar?

 

Because most major multinational companies give you a number of salary options one of which is converting your US$ salary and pegging it at a fixed RMB exchange rate. Mine is pegged at 8.36 RMB per US$.

 

Granted I'd have been FITA if the RMB had gone the other way.

[GDBILL]

The economy is booming in China however many of the young in China are finding it difficult to have a roof over their heads. Price of home have soared where it now takes 60-70% of a person income just meet their mortgage payment. The bubble is growing and when it pops there is going to trouble in China.

 

http://www.washingtonpost.com/wp-dyn/conte...0021700265.html

 

Most Chinese people don't get mortgages. They pay cash for the complete price of their home. This includes young and old alike.

 

Somebody forgot to tell the banks that then.

 

While in rural a third-tier cities cash is king, the majority of homes sold in Beijing, Shanghai and Guangzhou are with conventional mortgages.

[a2784]

This may not be directly related. But many experts are saying Chinese yuans are under-valued by 25-40%. But if they let yuans rise 40% (in 5-10 years), it will be a huge problem for U.S. citizens who plan to retire in China, because the U.S. income from pension souces will not go far in China when converted to yuans.

 

 

But it will be a gift from heaven for those who work in China and have their US$ salary pegged at a rate of 8.3 RMB per dollar.

Why would they be pegged to 8.3 RMB/dollar?

 

Because most major multinational companies give you a number of salary options one of which is converting your US$ salary and pegging it at a fixed RMB exchange rate. Mine is pegged at 8.36 RMB per US$.

 

Granted I'd have been FITA if the RMB had gone the other way.

That is what I thought you meant but I asked because it seems your company is much kinder than ours. Usually the company adjusts the peg as the exchange rate adjusts (usually only if it moves by more than 10%). We are pegged at 6.85 RMB/USD.

Edited February 21, 2010 by a2784 (see edit history)

[a2784]

The economy is booming in China however many of the young in China are finding it difficult to have a roof over their heads. Price of home have soared where it now takes 60-70% of a person income just meet their mortgage payment. The bubble is growing and when it pops there is going to trouble in China.

 

http://www.washingtonpost.com/wp-dyn/conte...0021700265.html

 

Most Chinese people don't get mortgages. They pay cash for the complete price of their home. This includes young and old alike.

 

Somebody forgot to tell the banks that then.

 

While in rural a third-tier cities cash is king, the majority of homes sold in Beijing, Shanghai and Guangzhou are with conventional mortgages.

Same for Qingdao and Shenzhen

[ShaQuaNew]

The economy is booming in China however many of the young in China are finding it difficult to have a roof over their heads. Price of home have soared where it now takes 60-70% of a person income just meet their mortgage payment. The bubble is growing and when it pops there is going to trouble in China.

 

http://www.washingtonpost.com/wp-dyn/conte...0021700265.html

 

Most Chinese people don't get mortgages. They pay cash for the complete price of their home. This includes young and old alike.

 

Somebody forgot to tell the banks that then.

 

While in rural a third-tier cities cash is king, the majority of homes sold in Beijing, Shanghai and Guangzhou are with conventional mortgages.

 

 

Got any evidence of that?