Chinese cycle...

Article;
China dwarfs US; Money sloshing around Chinas economy tripled since 2006.

Comment;

What will happen is everybody tries to sell at the same time... if everybody is investing in houses it means they will sell it at some future point of time... they will wait for the right signal... generally people follow investment cycle which depends on monetary policy... if people expect a tightening, a slowdown, a fall in the prices... An investment cycle generally last a few years, 10-15 years (or more). For example the US falls in recession every 10-15 years. Oil prices are an indicator of demand, especially in the US… Many of the booms in the US coincide with oil price peaks… But during the last recession the oil prices too coincided with housing prices… In China, or may be true for many other countries too, housing prices too, again, could be an indicator of demand. All prices move in the same direction. During booms interest rates fall and rise during the down turn. The Chinese economy is trying to keep a tab on interest rates to control demand and inflation which will also strain the shadow banks after all these banks too borrow from the regular banks. Liquidity will start declining and demand for houses will go down and prices will start falling and the investors will eventually start selling. Actually they will try to sell before the prices start falling. Investors decision to sell or hold the property also depend on his time frame of the investments, if they want to see more than one cycle, the longer term investor, they will hold. I think the loose monetary policy followed the recession has probably come to its end…