Some incredible charts on what’s happening in China right now.
So the Coronavirus seems to be dragging on in China.
The Chinese government is saying that they’re close to being on top of it, but you know, I wouldn’t trust the CCP as far as I could throw the people’s plenary. Chinese data is notoriously dirty at the best of times, and I doubt virus numbers are going to be an exception.
But we do have this mind-blowing chart:
Look at those sales numbers! The entire property industry has been laid out on the mat.
People just aren’t buying.
Because people just aren’t moving.
Real estate offices, like most of the country, remain in shut-down.
And The New York Times reckons that half the population is facing strict travel restrictions:
At least 150 million people in China — over 10 percent of the country’s population — are living under government restrictions on how often they can leave their homes, The New York Times found in examining dozens of local government announcements and reports from state-run news outlets.
More than 760 million Chinese people live in communities that have imposed strictures of some sort on residents’ comings and goings, as officials try to contain the new coronavirus epidemic. That larger figure represents more than half of the country’s population, and roughly one in 10 people on the planet.
China’s restrictions vary widely in their strictness. Neighborhoods in some places require residents only to show ID, sign in and have their temperature checked when they enter. Others prohibit residents from bringing guests.
But in places with more stringent policies, only one person from each household is allowed to leave home at a time, and not necessarily every day. Many neighborhoods have issued paper passes to ensure that residents comply.
In one district in the city of Xi’an, the authorities have stipulated that residents may leave their homes only once every three days to shop for food and other essentials. They also specify that the shopping may not take longer than two hours.”
One in ten people on the planet effectively under house arrest! Wow.
And the CCP is saying that China has gone back to work, but that’s not what the data shows.
Road congestion data suggests that the roads are empty:
While daily trip numbers haven’t bounced back after the New Year holidays:
Suggesting this year is wildly different from past years:
As a result, Nomura estimate that only 20% of the workforce has actually gone back to work:
So no wonder property sales have tanked. Who’d be buying property when all this is going on?
But without volumes, prices are going to have to fall. Developers with stock on their books can’t wait forever for conditions to normalise. They’ve got debts to pay.
And so we’re already seeing sales incentives being rolled out:
China’s leading property developer Evergrande Group announced Sunday it is set to launch great incentives to lure domestic consumers via online subscriptions starting Tuesday, and an analyst said such a “self-rescue” promotion would attract more industry followers and help shore up the sluggish domestic housing market in February amid the novel coronavirus outbreak.
Evergrande plans to offer 25 percent off for consumers who purchase housing units, including apartments and office buildings, from Tuesday to February 29.
The discounts will continue and be adjusted to 22 percent off from March 1 to 31.
It will be the largest incentives the firm has offered in its business history, Liu Xuefei, vice president in charge of sales with Evergrande, told an online meeting on Sunday.
A “self-rescue” package. That’s cute.
Anyway, I think this is an interesting case study in how a disease epidemic can affect the property market.
It could happen in Australia too.
The key transmission mechanism is volumes. The real estate industry needs a minimum amount of trade to support the new-build sector.
If that trade dries up, it’s only a matter of time before prices start to fall.
Here’s hoping that it never happens here.