The amazing thing about the apparent property bubble in Shanghai is literally bears all the markings of our last bubble. This is not just in terms of price, but in terms human mentality and behaviour.
Families are worried they “must buy now” or they’ll “miss the boat” forever, even as shoddy developments go up empty in some parts.
Here’s another little story that should sound familiar.
Property developers are being accused of hoarding land — holding onto it, rather than building on it — on the belief that if they wait some period of time it will be more valuable when they do develop it.
This is classic behaviour, and we saw it here with the homebuilders, who would purposely throttle back their own sales on the belief that if they hold any given house for another quarter (or more) they could sell it for more. For a refresher, here’s a great 2005 column from TheStreet.com in which the author blasts Toll Brothers (TOL) for filling out their communities too quickly — AKA not hoarding their land.
Anyway, it’s all happening again on the other side of the world.