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NEWS AND VIEWS THAT IMPACT LIMITED CONSTITUTIONAL GOVERNMENT

"There is danger from all men. The only maxim of a free government ought to be to trust no man living with
power to endanger the public liberty." - - - - John Adams

Wednesday, December 14, 2011

Chinese real estate bubble bursts


People who made down payments on homes at a China Vanke Co. development protest in Shanghai outside the Vanke Shanghai Center, standing opposite a row of security guards.

Mobs have destroyed real estate offices and demanded refunds of up to 40% from developers
  • Over 1,000 real estate offices have closed
  • One firm is offering to throw in a new BMW with a home purchase
  • Will China throw the world into a Depression?

The Chinese bubble has burst and is rapidly picking up steam.

China's economy is neither capitalist nor Communist, but a blend that would best be called Fascism or Corporatism.  This combo capitalist-command economy has created a massive credit and real estate bubble in trying to keep the masses of people employed.  But the party is over.  The housing market has collapsed.

You have falling home values,  and debt-strapped borrowers.  It's old news in the United States, but now the air has started to leak from another great housing bubble — in China.

Home prices nationwide declined in November for the third straight month, according to an index of values in 100 major cities compiled by the China Index Academy, an independent real estate firm. Average prices in the Shanghai area are down about 40% from their peak in mid-2009, to about $176,000 for a 1,000-square-foot home.

Sales have plummeted. In Beijing, nearly two years' worth of inventory is clogging the market, and more than 1,000 real estate agencies have closed this year. Developers who once pre-sold housing projects within hours are growing desperate. A real estate company in the eastern city of Wenzhou is offering to throw in a new BMW with a home purchase, reports the Los Angeles Times.


China's Ghost Cities and Malls
Documentary by SBS Dateline (Australian TV) about the Chinese real estate market.



A developer in Shanghai slashed prices 25% off the $250,000 price to attract buyers in a slowing market.

Outraged, hundreds of buyers who paid full price trashed the sales office, scuffled with employees and protested for three days before police broke up the demonstration.

With property values now falling, angry home buyers have staged at least seven demonstrations in the last three months in cities including Beijing and Shanghai. Mobs have destroyed real estate offices and demanded refunds of up to 40% after developers dropped prices for later buyers.

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