Even before the latest Chinese home price data was released overnight, it was a pure bubble-buying frenzy.
As Chris Watling, the CEO of Longview Economics, told CNBC Thursday, “I think what’s going on in China is troubling … some of the valuations there are really quite extraordinary… We’ve double checked these numbers about seven times, because I found them quite hard to believe.”
What Watling found is that housing in major cities in China has seen price hikes over the last year
that resemble the famous Dutch “Tulip Fever” bubble of 1637, according
to new research by economic consultancy firm Longview Economics: the firm found that only San Jose in the Silicon Valley is more expensive than Shenzhen. The Chinese city has seen prices rise 76% since the start of 2015, with the acceleration beginning in April 2015 as the country’s stock market was nearing its peak. The situation in Beijing and Shanghai is similar, albeit less extreme, the company states.
According to Watling, the typical home in Shenzhen costs approximately $800,000. Watling said that the house-income ratio in Shenzhen is now running at 70 times, compared to around 16 times in somewhere like London.
This post was published at Zero Hedge on Sep 19, 2016.
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