Posted on 18 September 2012 with no comments from readers
House prices have gotten so high in cities like Shanghai that it is actually cheaper to buy a condo in New York, reports Bloomberg TV. With Chinese house prices in many cities now falling this could be a shrewd move. Wealthy Chinese are also moving money abroad in case the economic slowdown in China turns into a crash.
Clearly this supports house prices in New York although you have to wonder if this would be enough buying to offset another major financial crisis or stock market correction. The US economy looks none too bright going forward but then neither does China…
Real estate has always been a booming industry over the past decade, wherever there is a good scenic view there are multiple big estate firms trying to take the whole pie within their ambit. As economic slowdown catches up in China, the wealthy and the upper middle class are trying their bit to buy in great condominiums, luxurious apartments in the West, looks like the prices are better off there than in Beijing. The worry that currency value may fall down has prompted the rich citizens to fear that their savings would not yield and have their interest vested in foreign shores.
With a cap on the countries cash controls, there are numerous ways were individuals are asking their friends and relatives to move out the money in small amounts, due to the legal limit which the government has set. More than 1 Trillion worth of money is parked out of the Chinese province. Several article written about how the offloading of the currency has put China on the brink, where people are either investing in real estates, paying off dollar loan debts, buying offshore businesses, companies and other profitable areas as they potentially feel the pressure that the currency would slow down.
The way the capital flight done by the wealthy there is a lot of pressure on the government to reinforce the trust of the people and the banks are the most pressed sector as they have a long lending history that banks have to recover. The threat to stability has put the government in action, which has this relatively new kind of problems which has to be navigated, and clamping down on the outflow of money from its coffer to regain back the financial security for the benefit of the citizens.