A report in today’s China Daily says:
Second-quarter housing prices in 70 large and medium-sized Chinese cities rose 9.2 percent year-on-year, said the National Development and Reform Commission and the National Bureau of Statistics on Monday. The rise was 1.8 percentage points less than in the first quarter.
One of the regular debates on this and other sites is over whether there really is a problem of excessive hot money inflows, as I have been arguing for over a year. If stock market and real estate prices are collapsing, skeptics ask, then how can hot money inflow be excessive? Where does the money go?
Aside from the fact that there are many other places where hot money can go (commercial bank deposits, deposits in informal banks, and commodity hoarding are just three of the most obvious), I think we have to distinguish between slowing growth in real estate prices and declining prices. There are declining prices in certain real estate sectors – for example in some of the major cities – but overall prices still continue to rise, even in spite of what seems to have been massive overbuilding. It is hard to prove this, but the combination of overbuilding, hot money inflows, and all the gossip about SUVs carrying armed men in sunglasses and bags of cash suggests plausibly that hot money inflows have managed to keep up demand for real estate in what otherwise might have been a sharper supply/demand imbalance,.
Gregor Neumann, in the comments to Friday’s posting, cites a piece that argues that at least some property markets in China are seriously oversupplied, and yet we haven’t seen a real collapse in real estate pri
