| Can property tax ease the high housing prices? | |
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| Feb 10, 2011 03:34 | #21   |
 | about 20%. |
| Feb 13, 2011 10:32 | #22 |
| Dodger suggests it not a free market because you can only buy 70 year leasehold'. Sorry Dodger but that's nonsense. The available product is property on a 70 year lease and potential buyers make their economic decisions according to their own analysis. That's a free market. There is no market for freehold as there is zero supply. Jimmy used the word 'bubble' when he raised the issue. A 'bubble' is not high prices, it is a situation with unsustainable high prices which must surely collapse. Is there a bubble now? Maybe a little as investors chase unrealistic profits and have a property orientation. I suspect that unrealism means there is an element of bubble in the current pricing but far more important is that there is a mass of hidden demand (ie wants at a lower price than prevails) for property and a still very limited supply. The unsatisfied demand exists from people who are in substandard homes, want to move out from the family, or want a larger home, or a home in a better location and so on - at present most people grab a home where they can. It is not a bubble if borrowers can finance their loans, if they can sell reasonably quickly without making a loss. In general there is no problem on these even though the demand might have slowed a little. So now to the tax. It's basic economics: it adds to the price and provided it's a free market, and essentially it is, there will be less demand at the higher prices. Could such a tax could prevent a bubble? It couldn't prevent a major bubble (such as the American Banks engineered which created the World Financial Crisis), but I don't think that's anywhere near the today's reality. Sorry about another lecture. :) |
| Feb 13, 2011 13:58 | #23 |
| Paul, if I remember right you are a teacher, although now probably retired - as you inform - so what else could we expect than another lecture? ;=) "It is not a bubble if borrowers can finance their loans, if they can sell reasonably quickly without making a loss" The more I study the less I understand and the more I am beginning to think that the real possibility for a "bubble to burst" will be in the horizon when money is loaned to people who finally can not pay back and who have not a social network loaded with money to help him. Then the bubble would perhaps be social and lead to something as 1989, who knows. Oh, hell, don't mind about me, I am always painting the devil on walls... Carlos |
| Feb 13, 2011 14:01 | #24 |
| Quote:Originally Posted by APAULT It is not a bubble if borrowers can finance their loans, if they can sell reasonably quickly without making a loss.Before the GFC and the subsequent meltdown of U.S. property prices, borrowers had no problem "financing their loans". They also had no difficulty "selling their property quickly" and making gains. That was a bubble and the similarities in China are stark. |
| Jul 3, 2015 02:59 | #25 |
| Nowadays people in China buy shares with loaned money. In some cases prices have rised over 100% and the prices have nothing to do with reality any more. The value of production has increased less than 10% so there is a lot of air in the bubble. I don´t know about the principles of banks in China, what their demands are for giving a loan. Anyway, 1989 in Finland stock collapsed. People had put their houses or apartments for a deposit for their loans and many lost it all because the bank said they have to pay the loan back immediately. Prices of houses collapsed because the supply increased rapidly. Houses had to be sold cheap and people then had no enough money to pay their loans which led them to a situation where they had a lot of loan left but no house... Chinese people have earlier done well buying only for a need and loaning money from family. Now they buy to get rich and loan money from the bank. Some do get rich but most don´t and many will loose everything. Some will perhaps loose their familys property, too... I think this will happen for sure. Next year or the next after that or the next after that... no one knows when but the fact is that it will happen sooner or later... |
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