User: Brian Ripley: China Housing: Picture

The China Bull turns into a Mule. "The idea of buying a property with borrowed money didn’t become popular until 2004 when home prices in major cities started rising fast enough to compensate for interest payments, enticing buyers to borrow to buy property" said Liu Yuan, a Shanghai researcher. NOW "The Chinese housing market is clearly oversupplied, existing housing stock is sufficient for every household to own one home, and we are supplying about 15 million new units a year." said Gan Li, Chengdu economist. A third of households are involved in peer-to-peer lending with zero-interest loans among friends, or very high interest averaging 34%, viewed as the cost of credit for businesses and households excluded from the formal banking sector, creating the social class known as Fang Nu (Housing Slave). More at www.chpc.biz