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China mortgage boycott data erased by censors as crisis spreads

bloomberg.com

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Re: China mortgage boycott data erased by censors as crisis spreads

#101

Post by renewiltord »

ganyu wrote: post #27
CoastalCoder wrote: post #19

The linked story kind of buries the context info: > Nomura said the refusal to pay mortgages stems from the widespread practice in China of selling homes before they’re built. Funds from presales are kept in escrow accounts to use for construction. But confidence that projects will be completed has weakened as developers’ cash woes intensified. > “Inappropriate usage of presale proceeds and the lack of adequate super…

Short (?) intro for those who don't know how it works in CN: 1. Local govts are in heavy debt and sell land to pay back their debt. 2. Real estate corps pay a hell lot of money (don't care where they get them) to purchase a land ownership (for 70 years max) from the govt. 3. Before construction even begins, the real estate corps start selling the houses to citizens. 4. Citizens pay up to 40% of the total price on the…

Interesting. I wonder why the UK (which also has no ongoing property tax - just stamp duty) doesn't run into the debt problem. Perhaps, it's just that the country got rich during the period when the government was heavily involved in all that.

Re: China mortgage boycott data erased by censors as crisis spreads

#102

Post by robocat »

rr808 wrote: post #82
Erlangen wrote: post #15

The censoring is so horrible that Chinese are using other country's name to substitute China. For example, there is a question in Zhihu, "Will China become the next technological powerhouse?". The answer is talking about Russia literally, but it's about China. (Below is the answer translated by deepl). I don't want to talk about China, I want to talk about Russia. Can Russia become the next technological powerhouse?…

I know this is supposed to be about China, but is true of Russia and many poorer countries. The elite of the country can siphon money of simple industries like oil and primary industries, but they can't control high tech. Kamil Galeev writes some great threads on this https://twitter.com/kamilkazani/status/1501360272442896388

Interesting, and that thread contains some great links. Reformatted: https://threadreaderapp.com/thread/1501360272442896388.html

Re: China mortgage boycott data erased by censors as crisis spreads

#103

Post by dylan604 »

theplumber wrote: post #91
Animats wrote: post #69

Earlier quoted context omitted.

> Of course, most US mortgages are taken out on housing units that actually exist. Construction is usually financed by a construction loan, at a higher rate than a mortgage, and the builder is the borrower. But not always. Here are some US failures from the 2008 housing crash.[1] China has an unusual problem - the Party really, really doesn't like elections. For anything. But China has buyable apartments, which work…

[flagged]

I don't know, I'd be willing to guess that the majority of developers in the US would love to be able to do this very kind of ponzi scheme as accepted and gov't approved business model

Re: China mortgage boycott data erased by censors as crisis spreads

#104

Post by mminer237 »

dylan604 wrote: post #103
theplumber wrote: post #91

Earlier quoted context omitted.

[flagged]

I don't know, I'd be willing to guess that the majority of developers in the US would love to be able to do this very kind of ponzi scheme as accepted and gov't approved business model

Uh, I've never had an American property developer say how he wishes the HOA could just be part of the Democrat/Republican party.

Re: China mortgage boycott data erased by censors as crisis spreads

#105

Post by dialogbox »

ganyu wrote: post #27
CoastalCoder wrote: post #19

The linked story kind of buries the context info: > Nomura said the refusal to pay mortgages stems from the widespread practice in China of selling homes before they’re built. Funds from presales are kept in escrow accounts to use for construction. But confidence that projects will be completed has weakened as developers’ cash woes intensified. > “Inappropriate usage of presale proceeds and the lack of adequate super…

Short (?) intro for those who don't know how it works in CN: 1. Local govts are in heavy debt and sell land to pay back their debt. 2. Real estate corps pay a hell lot of money (don't care where they get them) to purchase a land ownership (for 70 years max) from the govt. 3. Before construction even begins, the real estate corps start selling the houses to citizens. 4. Citizens pay up to 40% of the total price on the…

It does look like a Ponzi. Aren't there any regulations to prevent that?

It's pretty similar to Korea until the step 3 but we have some safeguards after that.

Instead of giving money directly to the development corp, we give it to a trust corp. And the dev corps can only use the money to build the building.

And if the dev can not meet the due date and if it is delayed more than 3 months, the contract can be cancelled and the owners can get the money back.

That very rarely happens because dev corps desperately meet the deadline regardless of the quality. That causes hell lot of another issues but that's totally different story.

It seems to me like there are many things missing in the Chinese real estate system. Or is it just because no one cares the regulations?

Re: China mortgage boycott data erased by censors as crisis spreads

#106

Post by robocat »

WheatM wrote: post #84
unicornmama wrote: post #60

Earlier quoted context omitted.

~96% of us humans don't live in America, most of us don't have 30 year mortgages.

30 year mortgage are normal in New Zealand and Australia, as well as the UK and at least some parts of Europe.

You are confusing a “30 year mortgage” with a “30 year mortgage”. They sound the same, because they have the same term to repay the principal, but they are completely different because in the USA you usually know your repayments for the next 30 years, but in many other countries the repayments can go up a lot if interest rates rise.

In the USA, the usual mortgage has a fixed interest rate for the term of the mortgage. In New Zealand the interest rate is approximately a floating (edit:variable) rate over the 30 year period.

In NZ the mortgage interest rate (which controls your repayments) can be fixed for up to 5 years (the median is 2) but after the “fixed” period the interest rate resets to the current interest rates (edit: typically mortgagees lock in a new 2 year “fixed” rate at the current 2 year interest rate). NZ rates were around 2% to 3% since 2008 [1], but now they are closer to 6% [2] and most mortgage holders in New Zealand will have to pay twice as much for the interest component of their mortgage repayment, putting some people under financial stress (an acquaintance is being forced to sell an investment property because they were over-leveraged). The mortgage interest rate over the 30 year term is more of a stepwise approximation to the floating interest rate: I am unsure how much control the mortgage holder has over varying the principal repayments (I think I can pay 20% more principal per payment, shortening 30 year term to 24 years).

It is more complicated than that, and the USA has a wide variety of mortgage products you can buy including ones similar to NZ (not just the usual USA fixed rate 30 year). Other countries have their own quirks, so I am only speaking for NZ where I understand the details better.

[1] https://tradingeconomics.com/new-zealand/interest-rate

[2] https://www.interest.co.nz/borrowing

Re: China mortgage boycott data erased by censors as crisis spreads

#107

Post by dylan604 »

mminer237 wrote: post #104
dylan604 wrote: post #103

Earlier quoted context omitted.

I don't know, I'd be willing to guess that the majority of developers in the US would love to be able to do this very kind of ponzi scheme as accepted and gov't approved business model

Uh, I've never had an American property developer say how he wishes the HOA could just be part of the Democrat/Republican party.

Huh? I'm talking about taking money from you as a "deposit" so that he can finish building my house or buying the property for another person altogether with gov't approval yet no oversight on how the money is spent

Re: China mortgage boycott data erased by censors as crisis spreads

#108

Post by vkou »

sofixa wrote: post #85
vkou wrote: post #6

Earlier quoted context omitted.

They can't block GitHub, but all it takes is one phone call to Redmond, and their problem will go away. Microsoft has no issue with getting rid of politically problematic repos. https://www.technadu.com/github-removes-protest-organizing-a... - when Microsoft won't respect the right to protest in Spain, they won't give two figs about that same right in China. https://www.google.com/amp/s/www.vice.com/amp/en/article/8x…

If you can't see how the two examples you cite are problematic, i don't know what to tell you. There's a difference between protest and sedition, and the Catalan independence movement went full in on treason. The second is doxxy, so it is understandable to an extent.

> the Catalan independence movement went full in on treason

There's a few hundred million mainlanders, and the entire leadership of the CCP who feel the same way about Hong Kong. Perhaps Madrid and Beijing should compare notes?

Re: China mortgage boycott data erased by censors as crisis spreads

#109

Post by viraptor »

robocat wrote: post #106
WheatM wrote: post #84

Earlier quoted context omitted.

30 year mortgage are normal in New Zealand and Australia, as well as the UK and at least some parts of Europe.

You are confusing a “30 year mortgage” with a “30 year mortgage”. They sound the same, because they have the same term to repay the principal, but they are completely different because in the USA you usually know your repayments for the next 30 years, but in many other countries the repayments can go up a lot if interest rates rise. In the USA, the usual mortgage has a fixed interest rate for the term of the mortgage…

> confusing a “30 year mortgage” with a “30 year mortgage”

No need for confusing naming. You're talking about fixed rate, variable rate and short period fixed rate mortgages.

Re: China mortgage boycott data erased by censors as crisis spreads

#110

Post by lazide »

thriftwy wrote: post #83
lazide wrote: post #79

Earlier quoted context omitted.

Why should they?

I assume they want to have their economy, their real estate market, their developers and their banks mostly intact. But if they don't, forget what I've said.

The Chinese gov't can have that (at some level) without doing a giant rescue of everyone. If they want it to keep growing, sure they can do that, but the problem is they let it keep growing too much already.
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