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China housing: boom, bust, or bubble-or...?

July 2, 2016
Robert Ciemniak
Real Estate Foresight
How China's City-Level Property Cycles Work

How China's City-Level Property Cycles Work

This provocative analysis comes from Robert Ciemniak and his colleagues at Real Estate Foresight.To better understand what's happening in the animation, watch Robert explain...   

As You Watch the Animation

  • Note the few times in the cycles when full-press government policies stop all price rises and even cause declines. This shows pretty dramatically that, for all the hand-wringing, the government has the tools to cool the market when it wants to.
  • Pay special attention to how Tier 1, 2, & 3 cities change places with each other, depending on how rigorously the cooling policies are implemented in each city.
  • For fun, watch how Shenzhen goes off the chart, then spectacularly crashes as the local policies kick in. 

More on How This Works 

A city stimulates its property market. Sales pick up, housing prices rise, and then spike. The local government, under direction from the central government, puts the screws on the market, and prices go down.

Investors and speculators then switch to a city with laxer policies. Prices spike; regulations tighten; prices go down. They move on.

After a city goes into down-cycle, the time will come to again stimulate its market. And, soon, back come the investors and speculators.

A pattern seen over and over again all over China.

But, speculators and investors aside, demand continues from families upgrading to better/larger apartments, replacing old-style housing, moving to other cities and from urbanization generally (not the urbanization rate is still only around 56%).

12M House Price Change in 100 Cities (Monthly June 2011—June 2016)

‍Source: Analysis by Real Estate Foresight based on data from SouFun CREIS

12M NBS New Home Price Change in 70 Cities (January 2012—October 2017)

‍Source: ‍Real Estate Foresight analysis based on data from NBS

12M vs 1M Price Growth (NBS) (Monthly Jan 2012—May 2017)

Source: Analysis by Real Estate Foresight based on data from NBS, Datastream

100s of Cities Bubble Up & Down As Policy Makers Press the Levers China hasn’t collapsed. And, the bubble hasn’t burst because there may not be just one big real estate bubble. Instead, there are 100s of sizable cities, each moving in its own cycle, each responding to how its local policymakers stimulate & tighten-stimulate & tighten, and each having performance divergent from that of other cities. Watch here to see how city-level markets bubble up and bubble down...

12M vs 1M Price Growth (NBS) (Monthly Jan 2012—May 2017)

Shanghai Price Movements

Source: Analysis by Real Estate Foresight based on data from NBS

Robert Ciemniak

Robert Ciemniak

Founder-CEO & Chief Analyst
Real Estate Foresight
  • Founder-CEO & Chief Analyst, Real Estate Foresight Ltd
  • Global Head of Real Estate Markets, Thomson Reuters
  • International Master in Chess
Real Estate Foresight

Real Estate Foresight

FOR INVESTORS, FUND MANAGERS, LENDERS, DEVELOPERS & CORPORATES

We apply advanced data analytics tools and combine data science and technology with on-the-ground research, with a track record in accurately forecasting the Chinese housing markets.

  • Spot the turning points in the cycle
  • Pick the right cities and districts
  • Verify your critical project assumptions
  • Monitor your project
  • Communicate to your stakeholders
  • Stay on top of the news cycles

Channels

AsiaStrat
Granite Peak Advisory
Track Research
Trivium China
Gao Feng
Real Estate Foresight
China Beige Book

All Analyses by

Real Estate Foresight

2017 China Property Report

One of the highlights in our recent 'In Pursuit of Patterns' series of client notes, showed that the land sales growth had tended to lead the price growth and a significant increase in land sales would lead, with a lag, to the subsequent correction in prices.

So many twists and turns to the China Housing markets story

[CHINADebate Presentation] One of the highlights in our recent 'In Pursuit of Patterns' series of client notes, showed that the land sales growth had tended to lead the price growth and a significant increase in land sales would lead, with a lag, to the subsequent correction in prices.—Almost everyone on the outside seems to have missed the biggest bull market in China housing in 2016, culminating in policy tightening cycle kicking in at the end of the year. But what's next?

China’s property market risks are rising, says data expert

Price trends in China’s housing market are unsustainable, according to Real Estate Foresight chief executive Robert Ciemniak who worries that excessive leverage among homeowners could lead to a crisis. Real Estate Foresight founder and chief executive Robert Ciemniak has made it his business to gather and interpret real time data on China’s residential property market. He gives his thoughts on what’s to come in China’s housing market.

Applying AI / Machine Learning To Identify Patterns In China Housing Markets

Robert Ciemniak
Robert Ciemniak
11/30/17
Real Estate Foresight has published a series of notes to clients under the theme “In Pursuit of Patterns”, revealing some interesting patterns (or lack thereof) found among the key indicators for the China’s housing markets (house prices, sales volumes, land sales) and their relationship to the overall stock market and Chinese developers stocks

China housing: boom, bust, or bubble-or...?

100s of Cities Bubble Up & Down As Policy Makers Press the Levers China hasn’t collapsed. And, the bubble hasn’t burst because there may not be just one big real estate bubble. Instead, there are 100s of sizable cities, each moving in its own cycle, each responding to how its local policymakers stimulate & tighten-stimulate & tighten, and each having performance divergent from that of other cities. Watch here to see how city-level markets bubble up and bubble down...
Robert Ciemniak

Robert Ciemniak

Founder-CEO & Chief Analyst
Real Estate Foresight
  • Founder-CEO & Chief Analyst, Real Estate Foresight Ltd
  • Global Head of Real Estate Markets, Thomson Reuters
  • International Master in Chess
Real Estate Foresight

Real Estate Foresight

FOR INVESTORS, FUND MANAGERS, LENDERS, DEVELOPERS & CORPORATES

We apply advanced data analytics tools and combine data science and technology with on-the-ground research, with a track record in accurately forecasting the Chinese housing markets.

  • Spot the turning points in the cycle
  • Pick the right cities and districts
  • Verify your critical project assumptions
  • Monitor your project
  • Communicate to your stakeholders
  • Stay on top of the news cycles

Channels

AsiaStrat
Granite Peak Advisory
Track Research
Trivium China
Gao Feng
Real Estate Foresight
China Beige Book
coming soon