The big Chinese housing crash hasn’t happened yet. In fact, housing starts and sales picked up in the second half of 2010.
Westpac’s Huw McKay says this means you can relax for now (via Mish). Chinese demand for iron ore and other materials will keep rising.
But the real danger comes when the surge in housing starts reaches completion, flooding the market with supply. This will happen some time between late-2011 and mid-2012:
Our best efforts suggest that a lead period of between 1½ and 2 years is a reasonable if imprecise guide. As the surge in starts dates back to the middle of 2009, the first “cluster” of completions should be hitting the market in physical form later this year, and in “off-theplan” form somewhat earlier. But the post-April rise in starts is a story for early-mid 2012. Where will sales demand be at this time against a backdrop of monetary tightening? Not high enough.
Of course the x-factor is monetary policy. Over-aggressive tightening may speed things up; and less-than-expected tightening could keep the bubble alive.
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