Counter View: Yuan Depreciation Makes Home Prices Rise

Last week it was Devaluation Will Cause Home Prices to Decline in the financial press, now the opposite view is presented. Long story short, foreign investment in real estate is limited. Chinese cities are not as international as Hong Kong, Singapore, London or New York. Exports are more important for the economy and their recovery due to devaluation would have a positive effect on real estate.

iFeng: 人民币贬值或间接利好楼市 房价或再涨
Recently, multi-currency fluctuations triggered discussion, it was suggested devaluation lead to outflow of foreign capital, the asset valuation reduced, will impact the property market, and may even drag down prices, this argument is debatable.

...Meanwhile, the Chinese real estate market is a very local market, foreign capital accounted for a very small investment from a national perspective is negligible. 2014 national real estate development enterprises in place funding 12.1991 trillion yuan, of which foreign investment is only 63.9 billion yuan, accounting for only 0.5%. It should be said foreign investment and exchange rate relationship is very close, but the proportion of foreign investment is too small, not to mention the impact on the global basic.

...Why, then, it has often been the changes in exchange rates and the domestic real estate market is closely linked to it? There are two major illusion: First Foreign more popular in Beijing-Shanghai-Guangzhou-Shenzhen, the four-tier cities and foreign investment often is the focus of media attention, often have large foreign purchase or sale of commercial property news seen various websites and newspapers, like foreign investment and sales in China are not low proportion of real estate, exchange rate movements will directly affect the real estate market supply and demand.

In fact, even in the four cities accounted for foreign investment or purchase is very small, the influence is very limited, so that cities can not see the real estate statistics are statistics on foreign investment and export houses. It also should be noted that Beijing-Shanghai-Guangzhou-Shenzhen in the national real estate sales area accounted for only about 5%, even first-tier cities accounted for a higher proportion of foreign investment, the country, the impact of foreign exchange movements are also very limited.

Second, it was used to get to Hong Kong, Singapore, London, New York and other international metropolitan real estate market and the Chinese real estate market to a simple comparison. Hong Kong and other cities are an international financial center, the throughput amount of money is very large, export-oriented economy and international level are high, while the property market relatively strong speculative investment, exchange rate fluctuations of the property market will have a greater impact on all aspects of these cities include, This is understandable, but it can not take a country with an international financial center of the city to compare, even if the degree of financial development Beijing-Shanghai-Guangzhou-Shenzhen four first-tier cities, far below the international level over the city, not because of the real estate in these cities Market and exchange rates closely, it is true that the Chinese real estate market.

So, is not the exchange rate and the real estate market, China does not have a relationship? The answer is no. China is a very high dependence on foreign trade country, exchange rate fluctuations have a significant impact on the import and export as well as the national economy will be that this effect will naturally reflected in the real estate market.

The devaluation, the indirect effects of view, on the market may be a little more positive. China property market with foreign intersection is small, so the devaluation could cause capital outflows and little real estate relationship, but the devaluation of Chinese exports, but added a facilitator. China highly export-oriented economy, the world economy in the doldrums in recent years, the RMB appreciation on export a lot of pressure, many export enterprises falling profits or large losses, the impact of China's economic growth, the devaluation is a market self-correcting, we have some positive effect on improving exports and increase export revenues and corporate profits as well as macro-economic growth, and thus indirectly on the real estate market to form a positive.

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