No Worries, Housing Isn't Crashing Like In 2008

They aren't yet comparing the real estate market to 2008, but in Shenzhen, they're saying the sudden loss of confidence and cashing out by investors isn't like 2008. This comes amid a 70 percent drop in average transaction price in Shenzhen and Shanghai, and a 33 percent drop in Beijing, plus pyramid leveraging schemes by speculators over the past couple of years.

iFeng: 深圳地产投资客开始套现 但称市场信心远未降至2008年
Azu recently sold a suite in Shenzhen Pingshan, cashed out 2.2 million, in mid-2015 he spent 2.3 million to buy two homes. "The other home has zero cost, if house prices fall then I'm not afraid." Azu told reporters that this is a 17-year experience in the real estate investment housing room brother told him the real estate speculation principle, "safety first, make money second."

..."Now is far from the depth of 2008, then the market did not have the confidence, new house prices were generally cut in half, existing home prices a big sale and no one buys, now as long as you're willing to cut the price you can certainly sell it." House brother said.
The article also has the example of Mr. Zhang, who leveraged up his housing investments and used private investment levered at 9:1 to speculate.
To Mr. Zhang, for example, in 2014 to join the real estate team, sold Longhua Century Spring City 60 square meters two rooms for 2 million yuan in principal, in May that year to buy Nanshan District habitat 88 square meters, the total price of 230 Million, a year up to 5 million yuan, through the bank to mortgage, borrow 70% or 3.5 million, minus the previous 0.7 million mortgage loan, he had 2.8 million in cash, in June 2015 and 7 million total Price to buy the second set of Kam Lu Garden 88 square meters.
A good example for all those who still believe Chinese use cash to buy homes and have low debt levels. Speculators are pyramiding up their gains via mortgage borrowing. If you look at the last house purchased, you'd see a 50 percent cash downpayment, but the cash comes from the mortgage on an existing property.
This is one of the technology is that the first to buy a house quota, the divorce when the divorce, followed by second-hand housing do not buy new homes, and then through a high valuation, as well as the lender's cash flow, pay as low as possible down payment of 20 percent, borrow 80 percent, increase the leverage.
Here they're talking about getting a divorce to get around the home buying quoatas, then getting a high estimate on the home price to drive up the amount they can borrow, thanks to the divorce qualify as a first-time homebuyer. Use every method possible to use as much bank money as possible for real estate speculation.
Today, Mr. Zhang's house has risen to 7 million yuan, the second set rose to 13 million yuan, if he does not want sell and instead wants to buy a third home, he can continue to increase the mortgage, that is 7 million - 3.5 million + 13 Million - 7 million = 9.5 million in equity, mortgage 70 percent, and can borrow 6.65 million yuan in cash.

However, Mr. Zhang due to fear of regulation, he did not increase the mortgage, the debt control rate of 50% or less. Now Mr. Zhang has 4 homes, besides two in Xi'an, the two in Shenzhen have a market value of 20 million yuan in Shenzhen, debt of 8 million, monthly mortgage payment of 50,000 yuan. He told reporters that the cash flow is more adequate, there is 2 million cash on hand, plus rental income of eight thousand per month, three or four years for no problem, he envisaged the next wave of real estate boom to sell when One or two sets, he can achieve financial freedom.

According to the official data of Shenzhen, Shenzhen last year, the proportion of investors to 40%, the proportion of loans also more than 60 percent, the country's largest real estate plus leverage, the largest cash flow test.

Now the only worry that Mr. Zhang is that he set up a special real estate real estate fund, faced with no rice for the pot.

According to Mr. Zhang, organize friends into a real estate fund is a more popular model, you can do 1 to 9 leverage, that is, 10 million yuan principal, you can get 90 million in loans, the loan interest rate is about 10% Investment 100 million yuan of the project, the sale of the old building after the renovation and then sold, one square meter gross profit to 10,000 yuan.

But since last year, Shenzhen, the introduction of intensive policies to combat real estate, such as real estate license can not be sub-card, factory change apartment has also been severely cracked, the fund can no longer invest in real estate and other initiatives, so that these fund companies difficult.

No comments:

Post a Comment