--编译 石冠兰/程琳;审校 龚芳作者: bazooka 时间: 2010-7-14 18:00
Why China's Property Market Should Not Be A Concern
FNArena News - July 14 2010
By Greg Peel
Question: Why would no Australian political party of any stripe ever propose a tax on the sale of the family home? Answer: Because it would be electoral suicide.
Indeed, governments and oppositions in this country have over the past decades been forced to address the issue of housing unaffordability and potentially bubbling prices with the dilemma of not wishing to upset the mass of middle class citizens pursuing the Great Australian Dream. The current government is doing little more than building new public housing for the poor. Were it to release vast tracts of land for private middle-income housing as is often suggested, prices of existing homes would fall and voters would be very upset over lost property value.
Chinese authorities have also been addressing the country's property bubble for many years now, and have particularly stepped up efforts this last year. Beijing does not want to disenfranchise its new middle class from the get-go, but it does want to smash rampant property speculation. Fears that Beijing will cause China's robust and world-saving economic growth to subside at a critical time – a time of European debt crises and a struggling US economy – have been very much part of the reason stock markets corrected by 15%.
Aside from slowing the flow from the fiscal stimulus tap to banks lending money for property speculation, Beijing has also tried three other policies. One is ask local governments to increase the supply of property for private housing, another is to ask property developers to stop hanging on to housing inventory and hoping to sell at higher prices, and the other is dramatically increase the supply of low-end housing.
The problem is, property speculators and developers include a large number of local government officials. Unsurprisingly, they are not keen to comply with any policy that would see the value of their investments fall. Thus of the three policies, only the flood of subsidised new housing for China's vast number of low income earners is meeting with any success.
There is nevertheless one problem here, too, and that's finding builders who will agree to build the subsidised housing when the profit margin is contained. Building middle class houses is much more profitable in a rising property market. But Beijing seems to have found a way around that problem as well.
Hence the world perceives a risk that the flood of cheap housing will accommodate the ongoing flow of Chinese from rural areas to the cities, the property bubble will burst, Chinese demand for raw materials will plummet, and the world will be plunged back into recession without its premier demand driver. However GaveKal analyst Cathy Holcombe, based in Hong Kong, suggests that by increasing low-end housing, Beijing just might serve to underpin property prices, not destroy them.
Holcombe points to her own home city and its history in drawing her conclusion. It can be argued Hong Kong has been in a property bubble since the Second World War, discounting a few ups and downs along the way. Hong Kong property prices have remained among the most expensive on the planet, yet the colony has a long history of subsidised government housing.
When Mao Zedong went for a long walk in the late 1940s, hoards of Chinese fled to the British colony to escape communism. Suddenly the British were forced to release limited land for cheap housing to replace the shanty towns which had grown up and had led to a huge fire sweeping the city in 1953. Later impetus was provided by anti-British rioting in 1973. But land in Hong Kong was only leasehold, and so the colonial government was able to keep a tight rein on supply.
The other problem was that Hong Kong consisted then of little more than a port and a lot of willing labourers. Property thus became an important source of taxation to supplement little opportunity elsewhere. This has meant that Hong Kong as it is today has been built on a system of high property taxation affording low corporate and income tax policies in return. Hong Kong has become a thriving financial centre in the meantime, where it is simply accepted that property prices are among the highest in the world. The offset to high property prices and taxes is an otherwise low tax environment.
Holcombe sees a parallel between the numbers of Chinese fleeing the mainland for Hong Kong in the fifties and the current great rush of Chinese from rural areas to the cities. Initially, Beijing hoped a capitalist model would suffice to ensure such immigrants would be sufficiently housed. The private sector would build the houses and the government would make sure the banks were well funded to supply finance. Unlike Hong Kong, mainland China is well supplied with land. But inevitably, a class divide began to appear. The new middle class could afford to buy houses built by developers, but the formerly peasant class could not. Government officials and canny investors became wealthy from property speculation. House prices rose exponentially, only exacerbating the problem.
So now Beijing is in a mad rush to return to a more socialist model of providing subsidised government housing. But as is the case in Australia, the fear is cheap housing at the low end could spark a tumble all the way up the property ladder. The new middle class would be shattered at a time Beijing is trying to grow its domestic economy. Yet at first, Beijing simply tried to auction off as much land to developers to build subsidised housing as it could.
Its problem was that there were few takers. As noted earlier, who wants to build cheap housing for a fixed margin when you can build middle class housing for a rising margin? So more recently, Beijing has adopted more of a Hong Kong model.
It seems like reverse logic, but Beijing has tightened the rules on the land it is trying to sell. Bidders must now put up a sizable fee just to participate in an auction of any land, whether for public or private housing, and must pay 50% of the cost within a month. This has naturally now excluded smaller players from the market, which seems a funny way of trying to encourage sales.
The Hong Kong model, however, shows that the required subsidised housing will be built by the larger players if the larger players have the upper hand in all land auctions. The big developers will attempt to keep the authorities happy by going along with their wishes and will thus gain advantage in more profitable ventures. Under this model, Beijing, in return, will be able to control the developers more closely, and will take big fees. Like Hong Kong, the government will collect significant taxes from the property market.
All of which adds up to a sustainable and underpinned property bubble in which speculators are curbed through increased supply, but the middle class is not busted through collapsing prices.
And to this we add some other, oft noted points. The proportion of Chinese homeowners with a mortgage is very low by Western standards. There is no such thing as a subprime mortgage in China. Default rates are very low. Equity loans are non-existent. This means that were Chinese property prices to collapse anyway, only the speculators would be burnt. The average middle class homeowner would not actually lose any money other than on paper, would not be forced to sell, and those now relying on subsidised housing would have a greater opportunity to afford their own home.
So once Beijing gets all its policy tweaking right, the conclusion is that either China will suffer a property price collapse of little consequence or will maintain a sustainable and manageable bubble which will not actually threaten to burst.
Grave fears are unfounded.作者: charade 时间: 2010-7-14 18:11
as long as the government survives, nothing should be a concern in China.
when a collapse does occur, it should be a all-round collapse.作者: bazooka 时间: 2010-7-15 19:40
中国房市调控左右为难 下半年加力还是收手?
(本文来源:金羊网-羊城晚报 )作者: bazooka 时间: 2010-7-25 08:56
广州是个理性的城市作者: 阿根廷万岁! 时间: 2010-7-25 14:13
个人认为房价很大程度都是被外地打工族抬起来的,而实际上这些外地人在自己的所在城市都有自己的房产!作者: messi3313 时间: 2010-7-26 08:46
中国地产 稳步攀升中作者: bazooka 时间: 2010-8-1 06:56
Just How Risky Are China’s Housing Markets?
FNArena News - July 30 2010
Reinhart and Rogoff’s recent influential study of financial crises finds a recurring root – the country’s property markets. This column argues that a similar housing bubble may be developing in China. Urgent research is needed to determine the risk of a full blown crisis.
By Yongheng Deng, Joseph Gyourko and Jing Wu
China is experiencing spectacularly fast growth – so fast that many fear it is driven by a bubble – a property bubble to be precise. Recent memories of what happened when the US housing market bubble burst make the possibility of a Chinese housing bubble a critical concern for the world economy. So, is there a bubble or is it simply hot air?
Financial bubbles are governed by something like the economic equivalent of physics Heisenberg's uncertainty principle. It is impossible to observe a bubble with certainty without actually altering the bubble itself. If people knew it was a bubble, it wouldn't be a bubble – it would have already collapsed. It would not, however, be impossible to envision “diagnostic tests” that would provide a probabilistic identification of a bubble. Unfortunately the state of economics does not provide such a procedure (see Flood and Hodrick 1990 for an early analysis of what would be required to determine convincingly whether or not a speculative bubble exists).
The problem is particularly acute in the case of Chinese housing. Data limitations arise from the fact that there was no real private market in land or housing units in China until the late 1990s, so it is only possible to compare current conditions to little more than a decade of previous data. It is not hard to find highly respected professional investors with opinions on both sides of the question over China’s bubble (see the article by Barboza 2010 in The New York Times for a discussion).
New evidence on a Chinese housing bubble
Our look at the available data strongly suggests that prices are quite risky at current levels, and that it would take little more than a modest decline in expected appreciation to engender sharp drops in prices. The first foundation of this conclusion is that home prices in China are at their all time highs, and have been appreciating at especially high rates recently. This is documented in Figure 1 which plots real and nominal price indexes developed at the Tsinghua University for newly constructed homes in 35 major cities.
Real prices more than doubled over the past decade, with appreciation rates escalating at the beginning of 2007 and then again in early 2009. The most recent data show a record 41% (annualized) growth rate for the first quarter of 2010.
But it was not high price levels alone that convinced Case and Shiller (2003) and Shiller (2005) that US house prices had become unsustainable – it was the all-time high price-to-rent and price-to-income ratios.
Information on price-to-rent ratios is less widely available for Chinese markets. Figure 2 plots them since early 2007 for eight major Chinese cities. Price-to-income ratios are then plotted in Figure 3 for these same markets, using data back to 1999. For those unfamiliar with these markets, they are listed on the map in Figure 4. Each is among the largest markets in China, with none having a population below 8 million.
- Price-to-rent ratios have increased by at least 30% over the past 3 or so years in each of these cities.
- The jump was very large in Beijing, rising by almost three-quarters from 26.4 in 2007 to 45.9 in the first quarter of 2010.
- Hangzhou, Shanghai and Shenzhen also have seen their price-to-rent ratios rise sharply to over 40.
Even though income growth has been strong in urban China, price-to-income ratios also have been increasing in these same markets.
- Income growth did keep pace with house price appreciation in the other large markets, so housing has not become less affordable everywhere, according to this metric.
Chinese government data indicate that these price rises are underpinned by rapidly escalating land values. Because the Chinese government still owns all the land in urban areas and leases its use for long periods of time, we can observe land prices independently from home sales (which include the land plus the structure). We collected data on all the residential land parcel auctions in Beijing dating back to Q1 2003, and created a constant quality price index for Beijing residential land, controlling for a number of location and site quality variables that are described in Wu et al. (2010).
Figure 5 shows that real, constant quality land values increased by over 750% since 2003 in the Chinese capital, with more than half of that rise occurring over the past two years. Additional regression analysis showed that state-owned enterprises controlled by the central government played a meaningful role in this increase, as prices were 27% higher on the parcels they won at auction compared to otherwise equivalent land sites purchased by other investors.
Suspicions if not proof
While it is impossible to conduct a formal test of whether there is any fundamental mispricing in Chinese land and housing markets with these limited data, there certainly is much to make one more than a little suspicious that prices are unsustainable.
The magnitude of the increase in land values over the past 2-3 years in Beijing is, to our knowledge, unprecedented.
These increases post-date the Summer Olympics and the recent price surge in early 2010 suggests a relationship to the Chinese stimulus package which itself is temporary.
The role of state-owned enterprises also is potentially worrisome. It could be that these entities are superior investors and are purchasing sites that are of especially high quality in ways that we cannot control for in our empirical analysis. However, it also could be that moral hazard is at work here, as these entities are thought to have access to low cost capital from state-owned banks and may believe they are too big to fail. If this is the driving force, then prices are being bid up as one arm of the government buys from another.
More broadly, the sharp rises in price-to-rent ratios in Beijing and the other large markets look to be very difficult to explain fundamentally.
Most true fundamentals just do not change so discretely or in such magnitudes as to be able to explain these changes.
The standard economic model of home valuation indicates that owners must be expecting very high rates of price appreciation for these price-to-rent ratios to be sustainable.
That people might believe in such high appreciation is not incredible given the recent history of Chinese house prices. However, this sort of backward looking expectation formation is a classic element of bubble psychology. Moreover that history is quite limited and tells us that prices never go up forever – much less at the extremely high rates experienced over the past few years.
What happens if the bubble bursts?
To provide some insight into just how risky prices and price-to-rent ratios are at these levels, we calculated what would happen if people began to expect that their homes would grow in value by only 4% per year. For Beijing, prices would fall by over 40%, absent offsetting rent increases or other countervailing factors. While a 4% rate of appreciation is lower than what has been experienced in the capital city over the past few quarters, house prices did grow by less than that for five consecutive years from 1999-2003. Indeed, 4% is not an especially low rate of appreciation in the broad scheme of things. If it were to continue for a decade, prices would be 48% higher; over 20 years, prices would more than double (+119%).
Reinhart and Rogoff’s recent study of financial crises often finds the genesis in the country’s property markets (see Reinhart 2008 on this site). Recent data indicate there is reason to suspect a similar predicament in China’s housing sector. Whether it leads to a full blown crisis is another matter, of course, that depends upon the amount of leverage in the system and the safety and soundness of the regulatory environment, among other factors. Those clearly are matters in need of urgent research if we are to fully understand the potential fallout from a meaningful drop in Chinese house prices.
References
- Barboza, David (2010), “Contrarian Investor Sees Economic Crash in China”, The New York Times.
- Case, Karl and Robert Shiller. "Is there a Bubble in the Housing Market?" Brookings Papers on Economic Activity, No. 2 (2003): 299-362.
- Flood, Robert and Robert Hodrick (1990), "On Testing for Speculative Bubbles", Journal of Economic Perspectives, 4(2):85-101.
- Reinhart, Carmen and Kenneth Rogoff (2009), This Time Is Different: Eight Centuries of Financial Folly. Princeton University Press.
- Reinhart, Carmen (2008), “Eight hundred years of financial folly”, VoxEU.org, 19 April.
- Shiller, Robert. Irrational Exuberance (2nd edition), Princeton: Princeton University Press, 2005.
- Wu, Jing, Joseph Gyourko and Yongheng Deng. “Evaluating Conditions in Major Chinese Housing Markets”, NBER Working Paper 16189, July 2010.
Yongheng Deng is Professor of Real Estate and Finance at the National University of Singapore
Joseph Gyourko is Professor of Real Estate, Finance and Business and Public Policy at the University of Pennsylvania
Jing Wu is Assistant Professor at Tsinghua University
Copyright VoxEU.org - the above story was originally published on www.VoxEU.org - readers reading this story through a third party channel may find that any graphs are not included (our apologies for this technical anomaly) - here's a link to the original story on the VoxEU website: click here作者: bazooka 时间: 2011-3-17 07:59
中国“十二五”新规划关乎实现经济再平衡