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June 19, 2012 / 74

China Housing Prices – Go Figure!

The headline said, “China Home Prices Fall in More Than Half Cities Tracked” (Bloomberg.com, June 18, 2012)

Gosh. Big deal. It’s not like “Real Estate Prices Fall in St Louis”, or “Home Prices CRASH in Podunk, Iowa!”

Real estate in China is how they save for their old age. They buy a flat or whatever they can afford, and then just hold it until they retire. With 6 to 8% inflation (which supports the governmental kelptocracy), and only 1 to 2% interest paid on savings, it’s the only chance they have of making it to old age with any savings at all! So even if the price of houses/apartments were to CRASH by 80 or 90%, these folks WILL NOT SELL!

So they constitute a “floor” on volume of sales. Prices can only go down just so much before they run out of people willing to sell, then scarcity of available houses/Apts on the market pushes demand up which pushes prices back up.

I believe that this is also the reason they build ghost cities where no one lives. It’s to create apartments and houses to sell to people saving for their old age. If there actually is an oversupply of houses/apartments, no one will know it for 40 or 50 years when those buying apartments today in order to save for their old age begin to retire and need to sell them.

Add to that the “one child policy” which actually results in a “4 grandparent policy” old age gets to be an iffy situation.

Another aspect of the bad decisions being made in China and connected to the “one child policy” is the real world end result of the policy. The government dictates one child per couple. Since it is the males who support the parents, it is the girl babies that get aborted, leaving a host of excess males with no mates.

What do they do? If these males can earn enough money, they IMPORT brides from places like the Philippines. Which re-balances the population, and effectively eliminates (or at least somewhat mitigates) the population decrease caused by the abortions because for every aborted Chinese girl baby, the boy babies when they mature are IMPORTING brides.

We must always remember that it is China we’re talking about here. And Chinese people live in China, and the Chinese will ALWAYS BE Chinese, whether it makes sense to the rest of the world or not.

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