Inflation-adjusted home prices in China have fallen below where they started two decades ago, and the fiscal fallout is hitting local governments even harder than developers.
It peaked in 2021, so apparently prices have been declining for 5 years, and are still declining!!
The Chinese economy may be weird, but I don’t get how prices can fall below what they were 20 years ago, when China is much richer today than they were back then? We were told for a long time China was in a huge housing bubble, but this is crazy!
This will guaranteed ruin many peoples economy for decades even for the rest of their lives. And many will be tied to their house because it’s impossible to sell at a price that will clear the debt, so they can’t afford to move.
In a normal market it’s nice to own your own house, but a market like this, if you bought 5 years ago, it’s a nightmare.
many will be tied to their house because it’s impossible to sell at a price that will clear the debt, so they can’t afford to move
if housing prices fall, you get less money if you sell your old house but it also requires less money to buy your new house so it cancels out and you can move just as easily or difficultly as you could when prices were high.
No it does not cancel out, because when you lose money on your old house, you are left with that debt.
And having that debt makes it impossible to take a loan for a new house.
I’ve seen this work out in practice up to 10 years after the housing bubble burst in 2008. Where we visited many foreclosures people couldn’t afford to keep, and couldn’t afford to move away from. It’s a very bad debt trap that I think maybe USA has regulation to get out of, but IDK if other countries have that, we for sure don’t have it here.
It peaked in 2021, so apparently prices have been declining for 5 years, and are still declining!!
The Chinese economy may be weird, but I don’t get how prices can fall below what they were 20 years ago, when China is much richer today than they were back then? We were told for a long time China was in a huge housing bubble, but this is crazy!
This will guaranteed ruin many peoples economy for decades even for the rest of their lives. And many will be tied to their house because it’s impossible to sell at a price that will clear the debt, so they can’t afford to move.
In a normal market it’s nice to own your own house, but a market like this, if you bought 5 years ago, it’s a nightmare.
The housing market is different in China. Most home are paid entirely at sale without a loan.
if housing prices fall, you get less money if you sell your old house but it also requires less money to buy your new house so it cancels out and you can move just as easily or difficultly as you could when prices were high.
No it does not cancel out, because when you lose money on your old house, you are left with that debt.
And having that debt makes it impossible to take a loan for a new house.
I’ve seen this work out in practice up to 10 years after the housing bubble burst in 2008. Where we visited many foreclosures people couldn’t afford to keep, and couldn’t afford to move away from. It’s a very bad debt trap that I think maybe USA has regulation to get out of, but IDK if other countries have that, we for sure don’t have it here.