The worlds most important asset class.......


#1

smh.com.au/business/markets- … zn6ds.html

afr.com/personal-finance/the … 115-gzlmsh

could of put this in the China thread but since its also about the global aspect


#2

Well, I have my doubts that it’s about price. I think it’s about volume, and the volume is relatively independent of price, given the debt financing. So probably it would be closer to say debt financing of property construction is the most important asset class, but that doesn’t sound very sexy, since that’s been true for twenty years…


#3

No problem. We just need a few more countries with 1,000,000,000+ population. 8DD


#4

Is it a whole load of nothing or are we staring down GFC part 2?


#5

Part 2 is the right way of putting it, none of the fundamental problems that led to the 2008 crash have actually been fixed. I think I said years ago that the response of the powers that be in 2008 was basically waving a cotton bud at a man who has just had his arm chopped off.

Eventually he’s going to bleed out regardless. QE and ZIRP and extend-and-pretend…it’ll all come crashing down eventually and the decade of denial is only going to make the eventual mess much, much worse than if it had been dealt with properly in 2008.


#6

Like Sidewinder said the GFC was papered over rather than resolved. QE and ZIRP are the paper, the crack is the rise in inequality between the working and middle class and the upper class in the west and the unwillingless or inability due to neo-liberalism doctrine to get the QE/ZIRP money to those that actually need it and whose spending of it would get us out of this mess.

There was a lot of money pumped into US and Western property bubbles following the Dot-Com crash and 9/11 and it went pop when it became evident to everyone that strippers and shelf stackers can’t afford 3 gaffs whilst their income doesn’t rise. QE/ZIRP was the cash pump that saved us from meltdown following the GFC but where has that cash gone? Is it inflating a bubble? What will pop it?

The stock market looks like a bubble. Chinese property looks like a bubble. Loads of Countries in the west have property bubbles. What will pop them though, and which one will be the base of the house of cards?


#7

and how long can it last?


#8

This time the debt is a lot worse, and practically every major sov is deficit spending into the bubble.


#9

Going back to the China property situation for a moment, this is from a very recent article in the HK press. The details of how these young Chinese managed to finance their flat purchases and then service them should be concerning for anyone with an interest in global economic stability. It’s also clear, if it wasn’t obvious already, that the very high deposits demanded by the banks are often achieved using other sources of debt, such as tapping the parents pension savings. Combined with China’s rapidly aging population, this has disaster written all over it.

scmp.com/news/china/economy/ … me-spectre


#10

Chinese population dynamics are very poor - I think the population will peak by 2030 and will then fall short of large scale immigration from poorer parts of Asia.

The same thing is happening in Japan. A shrinking population and very little immigration keeps a lid on prices.


#11

Cultural attitudes to new versus old property seems to be a thing too. Fascinating little video.


#12

How is Chinese real estate an asset class if you don’t own the land and the flat you invested in is only built to last about 50 years, if you’re lucky


#13

The same way a 50 year income flow is an asset.


#14

What, like a 20 year old slave? :smiley:


#15

They have a good chance of owning it outright or extending it eventually.


#16

I read yesterday that in the USA there are now more poor people living in suburbs than near the city cores. There was no backup data so I didn’t even bookmark it, but it did raise that interesting prospect of that post babyboomer wake pulling back towards the social cores of the cities that had been abandoned as mass car ownership allowed sprawl to happen. Now in a reverse trend the ghetto’s are on urban edges rather than urban centres, the new mantra being ditch the car, escape from the suburbs.

Edit to add: well that’s coincidental: irishtimes.com/news/world/a … -1.3715016


#17

Thats a good thing IMO, so long as gentrification isn’t overbearing. I despair to think we are 10-20 years behind that.

Link below shows an IT mvoing way outside the city, it’s a 50 minute walk from Limerick city centre, at the outside edge of all suburbia - lecture hall windows with views of cattle in fields, insane amplification of donut development.
limerickpost.ie/2017/07/12/ … velopment/
goo.gl/maps/AiBtHsPgnqG2


#18

It’s 4km, which is about 10 minutes on a bicycle.


#19

I think what’s we’re seeing in Limerick is Ireland’s first campus town, provided more accommodation is built nearby in the coming years. It certainly is preferable than being limited by being crammed into the city. In the American sense Limerick and its university are very compact and close.


#20

I’ve always liked campus towns.
There’s always a nice vibrancy to them.