China's property market anecdotes and inventory absorption
Trying to make sense of things
On this Thanksgiving day, we are grateful for you, our subscribers! We’d like to wish you and those near and dear to you a wonderful Thanksgiving.
Today we are going to share some stories we've heard from people we've met. No names, but it'll perhaps help put some context around the charts and headlines about China's dire real estate market.
We'll follow with two charts on inventory absorption periods from the CRIC’s 50-City data. Chart 1 by Bloomberg Economics shows the average absorption rate in months by city tiers (averaged).
Chart 2 by us shows the four tier-1 cities absorption period over time and what looks like a trigger based on timing of news and change in the data trend.
Anecdotes
China’s residential property market is a market in that buyers and sellers are at odds, one wants a lower price and the other a higher price. Like all markets, there are winners and losers in hindsight. Here we share three categories of anecdotes: The Good, The Bad and The Ugly.
The Good
Some people managed to sell their apartments near peak levels in 2018ish. The ones who sold and didn't roll their cash into another property did the best.
One person we spoke with sold two apartments at this time and has kept the cash in the bank. They're feeling great. Another contact sold in 2021, when prices were down a bit from peak, and stayed in cash too (not Beijing).
The Bad
If you live in China, it's likely you live in a "community" 小区 xiaoqu. A xiaoqu's property market is a frequent topic of conversation. What everyone has realized: the market is frozen.
Second-hand (not new) home owners are refusing to lower their asking prices. Even after having their apartment on the market for 20+ months. So many people still want that near top-tick valuation. They've anchored their asset values on the top.