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In Desperate Move To Cool The Bubble, China Just Halted The Sale Of All Land!

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posted on Mar, 25 2010 @ 10:48 AM
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In Desperate Move To Cool The Bubble, China Just Halted The Sale Of All Land!


www.businessinsider.com

Big news out from China Daily. We're not exactly sure what it means, except that the central government is desperate to slam the brakes on the real estate market and looking to call a time out:
Sale of residential land temporarily halted
(visit the link for the full news article)

 


mod edit: fixed title




[edit on 3/25/2010 by JacKatMtn]




posted on Mar, 25 2010 @ 10:48 AM
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BEIJING - The Ministry of Land and Resources has ordered a temporary ban on the sale of land for housing in a renewed measure to ease soaring real estate prices. Yun Xiaosu, vice-minister of land and resources, said local authorities should not sell land for residential purposes until this year's housing land supply plan is released in early April. "Residential land supply will increase and low-income housing projects will top local governments' agendas," Yun said during a video-conference on Monday


So this is how they deal with an upcomming real estate bubble.Can they really stop what is going to happen by halting the purchase of homes now? Thoughts?

www.businessinsider.com
(visit the link for the full news article)

[edit on 25-3-2010 by Fatality]

[edit on 25-3-2010 by Fatality]



posted on Mar, 25 2010 @ 10:51 AM
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Wait... if they stopped the sale of homes, meaning less homes on the market, Wouldn't that RAISE demand and therefore raise the prices of current homes on the market?? Am I reading this wrong or does this seem backwards to anyone else



posted on Mar, 25 2010 @ 11:04 AM
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reply to post by trueperspective
 


That seems kind of backwards. At least for me..They might try to keep the prices high so they can prevent the instant collapse of prices. Not sure how much good can that do though..



posted on Mar, 25 2010 @ 11:17 AM
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Their government warned their market months ago that this halt was in the pipeline soon coming, so people with money bought as much additional apartments and land they could afford and then sold it quickly before the party would be over.

I recently watched a documentary on TV where a young professional engineer lady had bought 3 new luxorious apartments with borrowed money because she knew this stop was around the corner - she made a good profit when she sold them a month later. But she was very nervious to get out in time though!



posted on Mar, 25 2010 @ 11:17 AM
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This is what happens when the profiteers make the decisions. Like most political countries (are there any other kind?) they choose decision-makers based on anything but competence.

Will this affect the market as they seem to think it will?... I suppose anything is possible, depending of course on the tacit cooperation of the ubiquitous "private/government" Central Bank.



posted on Mar, 25 2010 @ 11:28 AM
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Originally posted by trueperspective
Wait... if they stopped the sale of homes, meaning less homes on the market, Wouldn't that RAISE demand and therefore raise the prices of current homes on the market?? Am I reading this wrong or does this seem backwards to anyone else


Yeah! one would certainly think this would be the case!

But in the documentary I watched, the average people with money who speculated wanted their ROI quickly - they were too nervous to keep what they had bought and prefered to sell as fast as they could.

One lady said that she couldn't trust what the government would do about the speculation after they halted it - so she said it was better to sell quickly because she was speculating with borrowed money from her family, the bank, friends etc.


[edit on 25-3-2010 by Chevalerous]



posted on Mar, 25 2010 @ 11:31 AM
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The progressives think they are so right and we are so wrong. All they need to do is look to China and what they do and they can see their own futures. It is sad when the truth escapes you even though your heart is telling you it is the right thing. Many bad things have come from good people thinking they are helping.



posted on Mar, 25 2010 @ 11:37 AM
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reply to post by Fatality
 


It's a command and control economy. They can set the prices if they so desire. To call it a bubble is a bit silly.



posted on Mar, 25 2010 @ 10:05 PM
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Chinese real estate, according to available data, is certainly in a bubble. This is a simple outcome of cheap money - people borrow - the monetary base expands - prices on investment assets rise.

When you tighten credit, or raise interest rates - then selling occurs and prices will fall - if rates rise a lot, or there is a saturation of short term investment (speculation), then prices may fall dramatically or collapse.

This stay of purchases is short term only - and is targeted at the upper end of the market where most of the speculation occurs.

They want to hold off purchases until they can bring more low cost real estate online - the additional supply is likely to negatively impact prices - so it makes sense what they are doing.

The Chinese govt is requiring all lenders to take larger deposits, this has a couple of good effects - it protects lending institutions if there is a downturn, and it also decreases the amount of property that speculators might buy, simply by cutting their ability to leverage - so it will reduce demand and flatten out the market.

Excellent response from the govt - while there may be some downside on the Chinese real estate market - if these measures have been implemented soon enough there should not be a crash - it will be impossible.



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