Housing Won't Beat the Dollar, But It Will Beat The Yuan

A case for buying a home in a first or second tier cities boils down to interest rates will fall and the yuan will depreciate. Purchasing power will be better protected in real estate.

It may make sense for a home buyer, but equities are the relatively cheap asset.

中国两类城市刚需目前可买房 房价定跑赢人民币
every day, said if the 10-year observation period, China's housing prices may not run to win dollars, but outperformed the renminbi is inevitable.

If you live in a second-tier cities, is "just to be family," then perhaps now is a good time to buy a house shot. The following reasons:

1, the overall surplus on the Chinese property market has serious, but a second-tier cities in the central area of the property, the problem is not too big to five years. This fact is the government will protect the bottom line, if a full collapse of second-tier cities, the Chinese economy is bound to collapse. In addition, these cities are in China "most powerful" of the city, they have the ability to mobilize resources to protect themselves. Currently they are in their respective provinces, is the best city public resources. These public resources include: education, health, infrastructure, business environment, security and safety. So when these urban open accounts, purchase later, to continue to attract foreign population influx. It is estimated that by the end, most of the second-tier cities to do so.

2, if the 10-year observation period, China's housing prices may not run to win dollars, but outperformed the renminbi is inevitable. China is the emerging economies, the "visible hand" intervention in the economy are more powerful state-owned enterprises, the central bank is not independent. With these factors, economic efficiency is low, zombie companies need capital more than RMB ultra hair is the norm. If the average inflation rate of 5% real, yuan purchasing the remaining 60% after 10 years, 20 years after the remaining 36%; If the real inflation rate of 7%, the purchasing power of the RMB remaining 48% after 10 years, leaving after 20 years twenty three%. If a longer period of observation, such as more than 20 years, housing prices in major Chinese cities also outperformed the U.S. central area, but also because of the long-term depreciation of the dollar.

3, you might say, the U.S. houses are cheaper, high rental returns. This is of course no problem. But not all Chinese people can immigrants are willing to immigrants, after all, is someone else's country, another language and culture. The vast majority of people still want to live in the country, they still should be based on domestic considerations. China's urban pattern is completely different with the United States, plus value added too much on housing, so China's high prices have some rationality.

4, from now to the end of the year, with more and more relaxed monetary policy, the RMB interest rate will gradually decline; achieved 3% in the first half of RMB devaluation, the second half will be in a steady state up; urge the central bank and the CBRC, commercial banks attitudes toward residential mortgage loans from "tight" to "neutral", then to "just be strong support"; government's attitude more clearly, there will be more and more cities to lift the restriction, even tax relief, relaxation of foreign population settled. These constitute a real good for the property market.

Different cities, the situation is different. Whole, the first-tier urban centers, suburban house has investment value. But most of the suburban house rose slowly, the economy is bad when large fluctuations. Second-tier cities the situation is different, such as a larger Tianjin, Chongqing suburb supply ratio, do be careful. Hangzhou , Fuzhou high prices, Harbin popularity somewhat inadequate. On the whole, or should the central area of purchase.

By buy-rich-quick era is over, the future of the house can withstand a good location and even slightly outperformed inflation. But overall, the house will become a "defensive" assets, rather than "offensive" assets. So, regardless of fluctuations within two or three years, because it's hard to grasp the lowest point. But 10 years, 20 years later you will find that today to buy a house in the center of China's major cities, how wise you are.

Finally, explain what I mean by "a second-tier cities." Basically there is no dispute tier cities, the mainland is the North, on the broad, deep, in addition to Hong Kong. Second-tier cities is a very chaotic concept, each institute has its own algorithm. I think one of the city's banking system in the accumulation of capital (financial institutions and foreign currency deposits), is the result of the city's economic operation, but also the future development of power, so the city's comprehensive competitiveness is to examine the most important single indicator.

Second-tier cities should have two important conditions: first, it's the balance of deposits in 2013 to reach more than 800 billion; Second, it is a "power" of the city, either municipalities, provincial capitals, either separately planning cities . If it's just a prefecture-level city, it must be large enough economic output, more than enough money, and in close proximity to a first-tier cities.

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