Fever: Chinese Housing Investment Soars Past 50pc of Total Demand

In Housing and Local Debt are China's Time Bombs, I posted an interview with Chinese billionaire Zhang Baoquan in which he said the following:
What was the chance of becoming an inflection point? First, the private housing rate in China has reached 120% in 2009. A large part of this 120% is the housing reform housing. After the change, it entered the market. That is to say, the average household has reached 120%, while the private housing rate in the world is less than 60%.
Whatever the exact number, Chinese buy a lot of speculative and investment properties. Many people, myself included, expected the return of this housing into the market during the prior disinflationary wave would result in tumbling home prices. We were wrong. However, if the situation was bad before, it is much worse now as the proportion of first home purchases collapsed from near 50 percent two year ago to near 30 percent in 2018Q1.

From an April report on urban housing put out by the Survey and Research Center for China Household Finance: 2018 年一季度城镇家庭资产指数报告
Investment demand is soaring.
The "hot cities" look relatively healthy:
Home price expectations have turned lower in most cities.
The home price expectation index for the 16 hottest cities saw drop similar to first-tier cities, from 126.2 in 2017Q1 to 108.7 in 2018Q1.

Keep in mind, household debt has soared over this period from around 80 percent of GDP past 100 percent and some portion of those loans were funneled into housing.

Beijing Banks Violated Regulations, ¥36 B in Consumer Loans Went Into Real Estate

This is not a small number even if only 36 billion. In 2017, individual mortgage lending in Beijing totaled 136.6 billion. That's an increase of 27 percent beyond what was reported. If the real total is higher, the drop off in lending reported at the end of 2017 greatly overstated the slowdown in real estate lending. this helps explain why real estate prices keep zooming ahead despite government regulations.
Beijing is also one of the more tightly regulated local housing markets.

Consumer lending via illegal credit card transactions is also likely flowing into real estate, as discussed in Housing Lottery Frenzy in Shenzhen.
Data from the Chinese central bank payments system indicates that as of the end of the first quarter of 2018 a total of 612 million credit cards had been issued in China, for an average of 0.44 per person.

13.14 trillion yuan in credit had been extended via credit cards, for an average of 21,500 yuan per card.
Not all of that went into housing, but with credit tight, no doubt some substantial portion made its way into speculative and investment home purchases.

H/T FT Alphaville: Chinese real estate, charted

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