Quote:
Originally Posted by donk.
While 1% rates don't exist, the bank rate seems to be sizzling at 3%ish?
Rumor has it, the whole evergrande, plus housing problem is causing havoc, and the banks are trying to promote buying homes by keeping the rates low.
How much of this is true, I don't know, I'm sure 50% of this forum could chime in for better info.
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Yes China interest rates are at 2-3% atm, but it's literally IMPOSSIBLE to get that money out of China. In fact, it's pretty hard to cross province buy property, so don't even think about cross country buying with the bank's money. Therefore the actual effect of foreign (Chinese) speculative investors in Canada or NZ real estate is quite low, unless they have immigrated. Even then there are strict restrictions in getting your money out of China.
After the recent chaos with lock downs, bad economy, bad politics etc, China has made it even more difficult (was already difficult pre-pandemic) to move money out to prevent a massive export of currency which could cause a quick collapse of the economy. Sure there are underground "exchanges" where you can pay a fee to get your money out, but that would deduct easy 10-15% from your money making the low 2-3% interest rates irrelevant.
The low interest to stimulate home buying is more targeted towards the domestic Chinese market. One factor is that a large part of China's economy is tied to realestate development, but the other major one is that the Chinese people has 70% of their wealth in real estate. Can you imagine with the current economic situation and the government does nothing to prevent a sudden collapse of the real estate market? 1.8 billion people would loose half their wealth, and there would be civil chaos and riots all over the country. Yes there is a massive bubble with crazy inflated housing value, but that is still better than 1.8billion angry people destroying the country.