"You do not see? The houses are empty." The tower blocks in the center of Dalian, a port city of seven million inhabitants, among the largest in China, looked like uninhabited beehives in August last year. Economists had already been discussing the risk of the real estate bubble for some years. Daniel, the English name of a Chinese computer engineering student at Lianing Normal University, pointed to the houses and did not hide a certain concern. No signs of life except a giant liquid crystal sign advertising an energy drink. The whole building seems to have been built just to hold it. And after nine months, that sign is still there and, says Daniel "the apartments are always empty".
For at least eight months, the price of houses in China has continued to fall. And the fall seems unstoppable. In April, the price fell again in 46 of the 70 main cities of the Dragon. According to official statistics released today by the Beijing government, prices last month fell again by 1,2%. A slide that adds to that of 0,7% in March, however recorded only in 38 cities. A figure that has alarmed Beijing which expects growth for next year to slow down to 7,5% precisely in the wake of the collapse in sales. Half a percentage point below the safety limit that investors have set at 8% growth, below which China could suffer too much in terms of domestic demand and infrastructure investments needed to create jobs.
A fact that brings back old ghosts, never chased away for the truth. The first signs came at the end of 2010 when the house price thermometer showed average increases of 4% in the last 90 years, with peaks of 200% in the Guangdong region. Shenzhen, Shanghai, Beijing, Dandong. Up to Ordos, a deserted city in the Chinese Hanyu Pinyin desert, in Inner Mongolia, a steppe area of clay and sand. Built in a short time, the city of Ordos was immortalized in March by the BBC shots. Empty buildings for two million people in a city with a hundred inhabitants. Almost all government representatives in an area of crucial strategic importance due to the abundance of one of China's most prolific businesses, that of rare earths.
Bubble and slow growth, two causes linked together. A risk completely unrelated to the other datum that alarms global economies, which concerns the growth of China, which continues to go but he pulled the brakes at 8,1%. If high-speed growth could allow for the "soft lending" of prices, now the slowdown in GDP and the collapse in prices risk creating a spiral that leads that "soft" to become "hard".
According to a Citi report, home prices will continue to fall another 10% within the year, together with a drop in sales estimated at around 15%. Estimates that Jp Morgan instead revises downwards, imagining a 20% drop in prices within the next 18 months. However, the message is clear and lies in the belief that the price will continue to fall, with the danger that the damage to the dragon's economy will be reflected globally.
