Home Prices in China May Hurt Families
This is remarkable:
A combination of large down payments and soaring prices means that even if housing prices were cut in half, only 5 percent of homes would be worth less than the remaining balance on their mortgages, the survey found.
Nevertheless, the government, banks and population have colluded to create a Chinese finger trap of emotional and psychological attachment to house prices always rising and, thus, continuing with one of the greatest global misallocation of wealth the world has ever seen.
When property developers in Hangzhou tried a week ago to cut prices to reduce their large inventories of unsold apartments, earlier buyers who had paid more protested, demanding that the price cuts be rescinded, according to the state media. Some signs have also emerged that construction, which accounts for nearly one-fifth of China’s economic output, is starting to slow.
The official China Daily newspaper published an unusually blunt editorial on Wednesday, warning that “Chinese policy makers must take measures to prevent house prices from becoming a source of financial instability, and they should prepare as early as possible to deal with the social impact that falling home prices may exert.”
