China: Housing Price Growth Slows

In China, trouble is brewing on the home front.

A major news organization has reported that some of the nation's recent home buyers have been expressing great dismay. 

The November Elliott Wave Financial Forecast, which published on Nov. 8, provides insight:

The Wall Street Journal on Monday said: "China's Housing Market Is Finally Cooling." Importantly, the Journal adds, "Some Homeowners Are Furious." The story focuses on a 29-year old woman who threatened to jump to her death because "her recent home purchase had ruined her life." "You promised me the house price wouldn't drop," yelled another woman outside the same real estate sales office. According to official statistics, home prices are still rising but the Journal reports that Beijing home sellers are now slashing prices "by 10% or more." This is a big problem in China because "wealth accumulation has come overwhelmingly from real-state gains." An analyst with a Chinese property firm explains that in China, "housing is a financial product. The more prices rise, the more demand you get." This is an accurate assessment, and, as The Socionomic Theory of Finance explains, it means that Chinese home prices, like all financial market prices, are "unconscious, impulsive, mood-regulated and widely rationalized." As the trend reversal becomes more pronounced, demand will dry up.

Here's an update on the housing market in the world's second largest economy from Reuters (Nov. 25):

China's house prices are expected to grow just 3.1% next year, the lowest over a calendar year since 2015, a Reuters poll showed, with tightening policies continuing to cool the market even as some easing is expected to prevent a sharp slowing.

A further moderation in China's frothy market would be music to the ears of Chinese leaders, who have been cracking down on speculative buying for nearly four years as prices soared in almost every city-tier while income growth lagged.

But policymakers have also been walking a tightrope, careful not to sink the market entirely -- a crucial growth driver directly impacting more than 40 industries -- as the economy is also dragged by an ailing manufacturing sector and flagging consumer confidence amid a trade war with the United States.

"The market expectation about ever-rising prices has completely altered," ... a researcher specializing in real estate finance at the National Institution for Finance and Development, a state think tank, wrote in a response to the survey.

Elliott Wave International's analysts expect the development of a global deflationary trend, which will crush worldwide real estate values.

Now is the time to prepare.

Read the free report, "What You Need to Know Now About Protecting Yourself from Deflation."