TRANSPARENCY

sooner or later, the former real estate editor of the shenzhen special zone daily (深圳特区报）will probably pay the price for creating transparency where transparency is not welcome. but for now at least, 牛刀's blog shines a bright light on the chinese real estate market with a strong grip of economic fundamentals and the courage to speak out on some serious issues.

a few posts that are well worth reading are on the economics of supply and demand, and on the cost of bribes paid to government officials by developers, which he estimates make up 30% of the country's house prices. for those of you wondering when to buy, he also offers some insights on the timing of the turn around.

he comes to some obvious conclusions - that you cannot have a properly functioning market without proper supervision ("监管的不断流于形式"), and that for the market to become healthy again, real estate prices first need to return to their real value ("房价不降到位，市场的预期就无法更改"), which they still haven't today. almost correct, as the traditional recovery process actually includes a period of prices going below their real value.

the irony is that all you need to do to avoid getting caught in the trap yourself, in china, or anywhere in the world, is simply compare the basics.

i was in bao'an last weekend visiting some apartments which a friend had recently bought. even today, the prices there are close to those in the center of my home town of antwerp, belgium, which is the second largest port of europe and controls 80% of the world's diamond trade, while 30% of the population have a university degree, and the average income is about 10 times higher than bao'an.

you do not need a university degree to understand there is probably something wrong here - either antwerp is way too cheap, or bao'an is way too expensive.