Escaped bubble for China?
China was the first to suffer from the Covid-19 crisis. But also the fastest to recover. This is why, immediately after the Chinese lockdown, the brick has become a real refuge for Chinese investors. However, this phenomenon is not without problems and risks. First of all, we remember the presence of mortgages that, in the long run, could lead to debt. To the point of triggering a real property bubble. Before going so far though, we at Realigro decided to analyze the situation in detail.
First, to actually understand what the dimensions of this phenomenon are, we report the following data. On the basis of statistical data, it emerged that already in March, in less than eight minutes, 288 apartments were sold online. All without buyers being able to view the structure live. A truly strong impact, if we consider that, the purchase of a property should be not only well thought out, an investment of considerable importance. Both economic but also social.
If this situation has revealed itself in full lockdown, you will surely be curious to find out what the news has been about the trends in June. Well, last month, 9,000 people bought a house in one day. All this by depositing an advance of approximately $ 142,000 (each). A real record, which allows us to declare with extreme mathematical certainty that the month in question has distinguished itself in the history of China; precisely for the number of sales contracts entered into. Do you want to know how much has been invested in the whole? The exaggerated figure is 1.4 trillion dollars! A situation that bodes well? Well, not everyone thinks so! If the lockdown now seems a distant memory, you still have to deal with reality. And the factors that leave the experts perplexed are two. The first is given by the increase in debt. The second, the increase in the respective value of the properties. And if mathematics is not an opinion, it means that, paradoxically, those who now decide to buy a property will automatically get into greater debt. And that's not all.
In the long run, a similar situation will lead to an even heavier result for the world real estate market. The so-called middle class of investors will disappear. For many, there will no longer be the possibility of buying a house because the possibilities will be reduced and restricted only to a small circle.
Furthermore, if we look at the numbers, the bubble risk does not seem to be so unfounded. We are talking about a level of indebtedness in China which corresponds to 60%, compared to the national GDP.
How the situation will evolve will only tell us the time. But until then, as always, we invite you to stay tuned on our official Blog!
First, to actually understand what the dimensions of this phenomenon are, we report the following data. On the basis of statistical data, it emerged that already in March, in less than eight minutes, 288 apartments were sold online. All without buyers being able to view the structure live. A truly strong impact, if we consider that, the purchase of a property should be not only well thought out, an investment of considerable importance. Both economic but also social.
If this situation has revealed itself in full lockdown, you will surely be curious to find out what the news has been about the trends in June. Well, last month, 9,000 people bought a house in one day. All this by depositing an advance of approximately $ 142,000 (each). A real record, which allows us to declare with extreme mathematical certainty that the month in question has distinguished itself in the history of China; precisely for the number of sales contracts entered into. Do you want to know how much has been invested in the whole? The exaggerated figure is 1.4 trillion dollars! A situation that bodes well? Well, not everyone thinks so! If the lockdown now seems a distant memory, you still have to deal with reality. And the factors that leave the experts perplexed are two. The first is given by the increase in debt. The second, the increase in the respective value of the properties. And if mathematics is not an opinion, it means that, paradoxically, those who now decide to buy a property will automatically get into greater debt. And that's not all.
In the long run, a similar situation will lead to an even heavier result for the world real estate market. The so-called middle class of investors will disappear. For many, there will no longer be the possibility of buying a house because the possibilities will be reduced and restricted only to a small circle.
Furthermore, if we look at the numbers, the bubble risk does not seem to be so unfounded. We are talking about a level of indebtedness in China which corresponds to 60%, compared to the national GDP.
How the situation will evolve will only tell us the time. But until then, as always, we invite you to stay tuned on our official Blog!
