Property share price crash - not before time

To say that there are asset bubbles in China is an understatement. The restrictions on alternative investments means money has been ploughed into A shares and property or both (shares of property companies). This has led to some spectacularly bad investments.

The FT report on the share prices of property companies. These have been a classic "short play" for a while. I suspect there is further to fall. The complicating factor of course is that it is not possible to predict what the government will do. If they wants shares to rise, they will rise.

China’s property market prepares for shake-up [FT]

A real estate agency closing hundreds of branches while the owner of another absconds; property developers cancelling fundraisings and debt spreads widening dramatically; house prices slumping – these sound like recent tales from the US housing market.

Yet these events have happened in the past three months in China, as some parts of the country’s housing market have shown signs of real stress.

Shares in many of China’s largest listed property developers have fallen more than 50 per cent from their highs of last year in the face of investor fears that some developers might be forced into bankruptcy.

After a couple of years of rapid investment, Chinese developers have been caught between two forces – government efforts to slow economic growth and the global credit crunch. The authorities have taken unusually strong measures to limit credit growth and have promised to introduce a tough new policy to reduce developers’ holdings of unused land.