According to China Daily, sales volume shrank in 16 of the country’s 20 largest cities, and by more than 50% in eight of them. In Beijing, sales fell 23%; in Shanghai, they were an astonishing 80% below the 2010 level. In Nanjing, things were so bad that some developers tried to entice buyers with buy one, get one free deals – buy a house, and get an apartment free.
Yet prices in the major cities continued to rise: up 10% in 2009 and 21.5% in 2010, the year hedge-fund hero Jim Chanos (the man who called the Enron collapse) described the market’s crash potential as 'Dubai times a thousand – or worse'. So far, we've seen a mild scrape but no crash. So why’s it so hard to predict?
Chinese have been buying property for only 21 years
The Chinese market’s built on different foundations from our own. People have been buying property for only 21 years, and the government runs the banking system and owns the land. As a result, the residential property market is only 'free' to a limited extent. Beyond that, it functions as a government tool with which to massage the wider economy.