More About a Chinese Housing Bubble
The glass is half empty view of real estate development in China was covered a few days ago in this blog, travelling impressions by blogger Ezra Klein. The post gets expanded upon. Ezra talks with Patrick Chovanec, an associate professor at Tsinghua University’s School of Economics and Management in Beijing, China:
Real estate is a relatively new market. China only came to private home ownership in the 1990s. So the market has never seen a sustained downturn. Very often when you have a bubble, it's because there's a new asset class, like Internet stocks or mortgage-backed securities, where people overestimate the upside and have no experience with the downside. And then the other factor is there's no property holding tax in China. So it's just treated like gold.
The bullish case for metals is usually supported by what is happening in China. The takeaway is that there is no track record for China and a bubble may very well be forming