Salient to Investors:

  • Since 2011, online investors since 2011 have helped drive a 50-fold increase in financing through peer-to-peer websites, and are turning to property as falling home prices prompt China to ease curbs aimed at stamping out speculation. China is trying to revive local-government revenues at the risk of bringing home-flippers back to the market.
  • Andy Chang at Fitch Ratings said that if liquidity rebounds, home prices will start to rise and sentiment improves, with peer-to-peer lending playing a stronger role. Chang says there are few investment channels with satisfactory performance in China – property remains relatively good among industries.
  • Ryan Li at JPMorgan Chase said speculative buying accounts for more than 20% of demand in first-tier cities.
  • Xu Hongwei at said that when the market recovers, local governments change their tune and the media is again saying things like ‘the property industry is overall  healthy. says 60% of investors lending through peer-to-peer websites had annual income of under ¥100,000, 85% of them male, and 80% between 20 and 40 years old: total outstanding investments rose to ¥58.1 billion at the end of August 2014 versus ¥1.2 billion at the end of 2011.
  • Fu Bei at Standard & Poor said the risks of online property speculation are very high because anybody with 1,000 or 2,000 yuan can take part and expects prices to keep falling because of the supply of unsold apartments. Bloomberg estimates the inventory of unsold new homes in 20 large cities jumped to an average of more than 23 months of sales in June.
  • Zhang Haiqing at Centaline Group said this short-term speculation is irrational and won’t become a trend because it is not supported by prices in a market downturn.
  • The average home price in China, excluding government subsidized housing, rose almost 180% from 2000 through 2012 versus a 10% gain in the Shanghai Composite Index.
  • Peer-to-peer lending pools money from small investors with as little as ¥50 to finance anything from wedding preparations, personal medical expenses to car purchases.
  • Dai Fang at Zheshang Securities said developers are selling for low prices because homes are not selling well, but the key question is: what if they can’t sell it?

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