China mortgage boycott data erased by censors as crisis spreads • Hacker News Board

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

#181

Post by chii » Sun, Jul 17, 2022, 6:40 AM UTC

ganyu wrote: post #49

fma wrote: post #42

Earlier quoted context omitted.

What happens after 70 years? Especially if the lease isn't renewed.

Legislation states that the lease is automatically renewed (40yrs, 50yrs or 70yrs depending on how the land was purchased) for residential housing, but there have been rumours saying that related laws will change so the property will be taxed during renewal. Considering that commercial housing started in PRC in the 1980s and the first batch of houses aren't technically expired yet, I think it's pretty hard to say wha…

by deliberately leaving the regulation vague, the CCP is able to use this regulation as a form of control over the populous.

Come the 70 yr renewal, if there are citizenry who are attempting to disrupt the power structure of the CCP, they will be the first to lose their lease (or some other method such as a high tax which is equivalent to losing the lease).

Mark my words. Regulation that is not fully well specified, and enforced universally, is basically just a political weapon.

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

#182

Post by chii » Sun, Jul 17, 2022, 6:43 AM UTC

bogomipz wrote: post #92

ganyu wrote: post #27

Earlier quoted context omitted.

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…

>."1. Local govts are in heavy debt and sell land to pay back their debt." What is the source of the debt, is it bonds, do they just run a deficit, something else?

> the source of the debt

paying gov't workers (as well as any outstanding debt from previously), services and such.

from what i heard, the local gov't is only paid some 40% of their required budget from the central gov't, and they have to make up the short-fall themselves.

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

#183

Post by snovv_crash » Sun, Jul 17, 2022, 6:47 AM UTC

411111111111111 wrote: post #172

TeeMassive wrote: post #134

Earlier quoted context omitted.

Jack Ma was a figurehead and didn't know anything about tech (see his interview with Musk). Musk has a very deep understanding of tech of his companies (at least for a CEO), so are most other American tech CEOs. As was pointed out, you can't siphon away tech like you can do with oil and other commodities without making things stop working.

> Musk has a very deep understanding of tech of his companies Like with his white paper for the Hyperloop which was fundamentally wrong and couldn't have worked? Or with his idea of putting Hyperloop segments on.... Wheels? Or with his idea to make the whole rocket reusable, until SpaceX accepted reality and pivoted to at least partial reusability? Or to cite current examples: full self driving that doesn't actively…

Watch his interviews on Everyday Astronaut, he actually does have a deep understanding of the tech side of SpaceX as well.

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

#184

Post by chii » Sun, Jul 17, 2022, 6:51 AM UTC

01100011 wrote: post #140

marianatom wrote: post #12

I was one of those people that thought China would never collapse due to its iron grip on economy and population. But look at recent activities * Chinese GDP shrinks to 0.4% in Q2 2022. Which is still suspicious because Shanghai economic activities declined -40%, and real estate overall activities dropped -30% * Massive mortgage boycott. Also public protests against lost deposits and unable to access bank is being ai…

China is at risk of following Japan into stagnation. It is especially likely given the massive wave of manufacturing repatriation going on now. If China loses its position as the world's manufacturer, it will have to rely on its untested military strength to obtain resources to appease its restless population. Interesting times indeed.

> China loses its position as the world's manufacturer

they will not because the reason japan (and the US) lost theirs is that china was cheap.

Where are you going to get this type of labour - skilled but cheap - other than china, in the next 10-30 years? Southeastern asian countries could make up some of the amount, but if they could do it today, they would've dominated already!

The repatriation of manufacturing is political propaganda - it won't work economically, as consumers' preferences is overwhelmingly for cheap goods, not expensive patriotism.

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

#185

Post by chii » Sun, Jul 17, 2022, 6:56 AM UTC

jollybean wrote: post #161

We saw the same thing happen in Korea and Japan after their post war construction, they moved up the ladder, worked hard, but then when they got a taste of real success there was a huge amount of speculation. In the late 1980's Japanese real estate was the most valuable in the world, then it collapsed and they have not recovered. This is a big secular shift for China. All of the previous projections were wrong, just…

> is now finding it's 'reality equilibrium' with the rest of the world.

the one big difference with all the previous examples is that China is authoritarian, where as the others were all (at least on paper) democratic.

China _could_ mandate the population to perform actions that the other tiger economies couldn't. I would be hesitant to assume that historical economic performance of japan and korea would give much indication to what future economic performance would be in china.

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

#186

Post by manquer » Sun, Jul 17, 2022, 6:57 AM UTC

chii wrote: post #180

differentView wrote: post #178

Earlier quoted context omitted.

>4. Citizens pay up to 40% of the total price on their own, and ask the bank to lend them the rest of the 60% and get it paid back in the NEXT 30 YEARS (often paying as much as twice as the original price). So they're less leveraged than most American home purchases of 5~20% down payment. 30-year mortgages are also standard in the U.S. You emphasized "NEXT 30 YEARS". Do you think it should be longer or shorter? >5. T…

> So they're less leveraged than most American home purchases of 5~20% down payment. the american home is already built (mostly), for such a down-payment. The bank takes the home as collateral. If it was an off-the-plan purchase (which is what the OP described), you don't really pay the full amount, but just a deposit (like 10-20%). The risk of the development falls solely onto the developers, not the buyer - the dep…

It is not typical in the western markets, but this kind of practice is fairly common in many markets. For example in India it works the same way, and most times the down payment is only 10%-20% or less. Generally the banks don't release parts of the money to you/developer unless certain milestones are complete. [1]

The practice of advancing money before construction completes, reduces the price for the buyer as already built properties sell for much higher than buying early. So buying early is way to buy a house when the prices are already out of reach for most. It can work if the project and financing is well regulated by the banks.

The property is cheaper[2] because these risks of delays, developer not finishing, not getting approvals so on exist and in theory is factored into the price, along with hedging future inevitable price increases.

[1] Indian real estate is by no means healthy and has its fair share of problems with these practices and delays, but not close to China's scale.

[2] In theory the risk is exactly matched by discounted price, but in practice seller will usually price it a bit higher than the value warranted by the risk factors. Also on average while it may work out, individual buyers may loose life savings as they are betting the farm literally when any specific purchase goes sour.

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

#187

Post by chii » Sun, Jul 17, 2022, 7:01 AM UTC

londons_explore wrote: post #25

helge9210 wrote: post #7

Let's assume, there is no censorship and anyone can join the boycott. What is the intended successful outcome of the boycott? If noone would do anything (no boycott), some customers would have to pay mortgage for apartments that won't be finished ever. With boycott, the blast radius will be bigger, possibly affecting the banking system. What options do authorities have?

It need not be a collective boycott... It can be individual people making individual decisions to not pay the mortgage because they believe that paying is a waste of money. Ie. why pay monthly for a house which will never be completed? You're just pouring money away! If you don't pay, the property will be taken off you, and probably valued at a high valuation (because the property developer wouldn't want to have thei…

> If you don't pay, the property will be taken off you, and probably valued at a high valuation

which would contradict the assumptions that lead to the decision not to pay.

Therefore, i suspect that the (half-completed) property would indeed be worthless (even to the bank), and is not a suitable form of collateral to recover any debt from. It might be the case where the bank eats the loss - or those who stopped paying the mortgage would be forced to pay (unlikely if this is a widespread issue as it causes social unrest).

My prediction is that the state owned banks would eat the loss, and wait out the confidence crisis - which might take 10 yrs - but then real estate will resume as before as a form of investment (and the cycle begins again).

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

#188

Post by paganel » Sun, Jul 17, 2022, 7:03 AM UTC

sbierwagen wrote: post #32

ganyu wrote: post #27

Earlier quoted context omitted.

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…

>get it paid back in the NEXT 30 YEARS Why emphasize that? 30 year mortgages are common in the US. At current rates of 5.5%, the total paid in interest will be bigger than the original loan. Of course, most US mortgages are taken out on housing units that actually exist.

> Of course, most US mortgages are taken out on housing units that actually exist.

To add to that, taking a mortgage for a house that doesn't already exist is a very used practice outside of China, too, I know over here in Romania lots of people do it.

It's called credit for "casa la rosu", basically all you need to show to the bank is a contract between you and the developer and a "registration" thingie for the house in question with the local city-hall (again, even if the house doesn't already exist, in practice). It comes with a price discount (I haven't kept up, I think it's in the 20-30% range, maybe bigger) but, of course, it's all very risky (or at least that's my opinion). That hasn't stopped lots and lots of people from taking those type of mortgages.

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

#189

Post by vkou » Sun, Jul 17, 2022, 7:03 AM UTC

kmonsen wrote: post #146

vkou wrote: post #108

Earlier quoted context omitted.

> 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?

I support the Catalan movement as I believe in all people’s right to self determination but that is fundamentally different. Catalonia does not have a legal right to just break free from Spain. It would also be difficult for any country if the richest region could break free at will. On the other hand Hong Kong has a legal right for local rules for at least 50 years after the handover in 1997. That treaty was broken…

Legality is meaningless when there was no meeting of minds when the law was drafted. Catalonia's current situation was created by an authoritarian, fascist government. The law in question was drafted without the consent of the governed, and is thus illegitimate, if it does not have ongoing consent of its constituents.

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

#190

Post by chii » Sun, Jul 17, 2022, 7:04 AM UTC

Grimburger wrote: post #125

rr808 wrote: post #81

Earlier quoted context omitted.

Pretty common situation that happens in a lot of countries. If the market is OK the developer takes deposit and the apartments and sells them to someone else. If the no one wants to buy the developer goes bankrupt and people who bought lose everything they've paid so far - bank forecloses on the apt which isn't worth much if anything.

It's happening right now in Australia, big builders are going bust leaving homes half finished or not built. Input costs have risen so much on fixed price contracts that there's really no other recourse for them. Buying off-plan is common worldwide despite what others are saying in here.

The problem in australia is slightly different - the off-the-plan builds are paid pro-rata on the construction, not in one go.

So it's still a loss for those purchasers, but the builders don't get the full payment upfront like described in china.