Something over a year ago, with property booming all over China, the central government put out a directive to all points instructing them to take measures to cool things down. Shanghai obeyed, and issued new regulations to stem speculation, including tougher terms on mortgages and re-sales. The measures had an effect, and the Shanghai market is down maybe 40% off its highs, mortgage applications are down, re-sales are down, home decoration companies are suffering, furniture shops are quiet … the chain of impacted industries is long and threatens to drag down the GDP of the whole city.
The irony is that just about no other location in the country bothered to follow the central directive, so that while Shanghai property sags, prices in other parts of the country remain relatively perky.
The Shanghai government, I understand, has decided to take measures to support the market, and extraordinarily the measure it has decided upon is to do absolutely nothing. It will issue no directives, either positive or negative with regard to the property market, but just let things settle down.
The property market remains a hugely sensitive issue for the authorities. As one person told me, Chinese people are now used to the idea that stock prices can go down as well as up. But with property, they don’t yet have the psychological preparedness to handle the concept of price falls.
Overall, it feels to me like China property is, selectively, a buy.