Chillin' out till it needs to be funded
The fears of overnight crippling of China’s and the region’s economy came to some fruction with China’s clampdown on buying secnd and third homes with larger downpayments and outright bans in April. The desired effect has been termed another ‘perfect storm’ by Nomura Intl strategist Sean Darby (marketwatch.com)
Darby warned in April of a “perfect storm” striking the Chinese real-estate sector, as government efforts to cool the market were likely to coincide with dwindling sales volumes and increasing supply.
In a research note earlier this month, he said the growing disparity between property prices and a share-price index of real-estate developers, which have moved in opposite directions since October, foreshadow a downturn.
Real estate has finally given due warning in the beginning of May with overnight declines of 20-30% in Shanghai and Shenzen (Week on week) Prices in Beijing are down 10% m-o-m from April. ‘
Standard Chartered cautioned that the figures were an average of luxury and mid-market transactions, and subject to potential distortions. Volumes of sales in housing in second tier cities like Chongquing are also down while supply has been increasing.
Complicating the life of the crisis is the play by minerals majors from Australia and Brazil which agreed to provide China at new spot prices that are increasingly linked to this market in China