Quote:
Originally Posted by Rochard
There is a difference between costs being high, and costs being impossible. Here in the US you can buy a nice condo in the city for $500k or $600k, which isn't too bad when you are making $60k to $100k a year. In China... They want $300k for these pads, but the average income is $6k a year. They want half down - $150k - and the balance due in three years. $150k down is twenty-five years of their average salary... That's impossible for the average person to buy, which is why all of these places are empty.
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That's why I say theres a bubble:
(1) High leverage used in purchases.
(2) Property out of line with incomes.
(3) Yields which will not cover mortgages.
Now compare that to another bubble economy like India.
I know many, many people in India in cities like who bought properties 13 years ago at like $50k and those properties are now worth $600k plus. They've gone up over ten times in value since 2000. A lot of this was zero interest rate money coming from western institutions during the financial crisis.
Property in Delhi and Mumbai is now some of the most expensive in the world much like in Beijing and Shanghai. There are lots of rich people out there sure but generally incomes do not support those high prices. That's just my view anyway, I know in India a lot of inherited wealth as well like with China.
Its actually impossible to work out how much of those values are bubble money and how much of it is economic growth and demand/supply related.