WEBVTT - China's Housing Crisis Has a Long Road to Recovery 0:00:02.160 --> 0:00:06.720 You're listening to Asia Centric from Bloomberg Intelligence, the podcast 0:00:06.800 --> 0:00:09.760 that pulls back the curtain on global business so you 0:00:09.800 --> 0:00:14.200 can invest better across the Pacific rim. I'm Tom Corbett 0:00:14.240 --> 0:00:17.360 in Hong Kong and I'm John Lee owning a home 0:00:17.760 --> 0:00:21.480 in China. It's a mark of accomplishment of status and security. 0:00:22.120 --> 0:00:25.760 Millions of middle class Chinese families have lost fortunes during 0:00:25.840 --> 0:00:29.760 China's housing crisis. Hopeful buyers paid for these homes they 0:00:29.760 --> 0:00:33.520 can't live in because cast strap developers simply cannot finish 0:00:33.560 --> 0:00:37.839 building them. The resulting fiasco has shaken China's economy, spawning 0:00:37.880 --> 0:00:42.320 a mortgage boycott, a crisis of confidence, and homeowners holding 0:00:42.360 --> 0:00:45.800 the bag. What does this mean for China's debt saddled 0:00:45.800 --> 0:00:50.680 property developers and what does China's property market future look like? 0:00:50.920 --> 0:00:53.960 In Japan you have bridges to nowhere, and in China 0:00:54.120 --> 0:00:56.960 you have houses that nobody wants to live in. And 0:00:57.040 --> 0:01:01.040 the damage to Pombia's confidence is already and it's very 0:01:01.080 --> 0:01:03.800 hard to see how is that going to recover. Let's 0:01:03.840 --> 0:01:09.120 bring in Christie Hang, a senior property analysts with Bloomberg Intelligence. Christie, Welcome, 0:01:09.360 --> 0:01:12.479 Hi John, Hi Tom, Thanks for having me, Christie, how 0:01:12.480 --> 0:01:15.759 bad is China's housing market right now? I would say 0:01:15.760 --> 0:01:19.679 it's a combination of weak demand and heavy oversupply. You know, 0:01:19.720 --> 0:01:22.759 in Japan you have bridges to nowhere, and in China 0:01:22.880 --> 0:01:25.679 you have houses that nobody wants to live in. You know, 0:01:25.760 --> 0:01:27.600 just to give your data point, you know, in eight 0:01:27.840 --> 0:01:31.240 cities in China there are five d one million square 0:01:31.240 --> 0:01:36.160 meets off and SO homes wait five one million square meters. 0:01:36.280 --> 0:01:38.360 But that would be the total area of all the 0:01:38.400 --> 0:01:42.600 homes in the U. S State of Massachusetts. Yes, and 0:01:42.680 --> 0:01:45.679 you know that is just for eight cities alone, and 0:01:45.800 --> 0:01:48.760 China has six hundred eighty cities. So it means that 0:01:48.800 --> 0:01:51.080 the amount of and SO homes in China could be 0:01:51.160 --> 0:01:55.200 equivalent to you know, multiple stays in America. So, Christie, 0:01:55.200 --> 0:01:58.120 how long will it take for trying to sell all 0:01:58.160 --> 0:02:02.560 these unsold homes? On average, the supply could take around 0:02:02.600 --> 0:02:07.880 twenty one months to digest, but it does vary across cities. 0:02:08.280 --> 0:02:10.560 You know, in an extreme case, in jong Jo, which 0:02:10.680 --> 0:02:13.840 is a city of thirteen million people in China, the 0:02:13.880 --> 0:02:17.799 housing stock is worth hundred months of seals, which means 0:02:17.840 --> 0:02:20.679 you know, eight years of seals. Christie, let's take a 0:02:20.680 --> 0:02:23.280 step back for a minute. How could this happen? How 0:02:23.280 --> 0:02:26.800 could China's property market get into such a mess where 0:02:26.840 --> 0:02:30.200 you've got home buyers paying for homes they can't live 0:02:30.240 --> 0:02:35.680 in empty cities and developers just settled with debt. What 0:02:35.880 --> 0:02:39.760 went wrong to make it stumble so badly? It boils 0:02:39.800 --> 0:02:42.840 down to the pre sales model in China. You know, 0:02:43.080 --> 0:02:46.680 ninety percent of Chinese homes on a presto basis, and 0:02:46.720 --> 0:02:49.880 this model works so long as sales kept going up, 0:02:50.440 --> 0:02:54.839 and you know, until it's not. Developers then cannot use 0:02:54.919 --> 0:02:58.680 new money raised from seals to pay the construction of 0:02:58.840 --> 0:03:01.720 the earlier projects that they sold. In fact, you know, 0:03:01.880 --> 0:03:05.880 there was the scrow account system in place in China, 0:03:06.600 --> 0:03:08.640 but with the debacle of every Grand you know, the 0:03:08.639 --> 0:03:11.519 whole governments are finding out that the money that is 0:03:11.520 --> 0:03:14.520 supposed to be deposited into this a scrow account is 0:03:14.560 --> 0:03:19.040 not there. Christie? Is it financial mismanagement? Is it greed? 0:03:19.240 --> 0:03:22.079 Is it a lack of oversight? Could is it any 0:03:22.120 --> 0:03:24.640 of those factors? I would say it's a combination of 0:03:24.680 --> 0:03:28.079 all those. So Christie, basically you're saying that if you're 0:03:28.120 --> 0:03:30.880 a Chinese buyer, you put a deposit down on a 0:03:30.960 --> 0:03:33.680 house that was supposed to be built, but that developer 0:03:33.760 --> 0:03:36.600 took that money and used it for other purposes in 0:03:36.640 --> 0:03:39.520 the case of every grand possibly paying their soccer team. 0:03:39.600 --> 0:03:42.360 But is that the case, yes, or their new ventures 0:03:42.400 --> 0:03:45.520 on new energy vehicle that they attempts to overtake Tesla. 0:03:46.040 --> 0:03:49.160 So Christie, how does this compare with the US financial 0:03:49.200 --> 0:03:51.840 crisis back in two thousand and eight. Now, you know, 0:03:51.920 --> 0:03:54.400 we all saw that movie The Big Short, and my 0:03:54.480 --> 0:03:57.720 understanding is that the US housing market really crumbled because 0:03:57.720 --> 0:04:00.960 banks were lending to people they shouldn't have, people with 0:04:01.040 --> 0:04:04.320 bad credit schools and bad FICO schools. Yes, it's a 0:04:04.440 --> 0:04:08.800 very different story in two thousand and seven, two dozen nine. 0:04:09.160 --> 0:04:12.080 You know, the crisis in US is demand side driven. 0:04:12.280 --> 0:04:16.440 We have extended, over extended home bias taking on mortgages 0:04:16.480 --> 0:04:19.159 that they can't repay. And in China is a supply 0:04:19.240 --> 0:04:22.919 side story. We have over leverage developers. You know, since 0:04:22.960 --> 0:04:27.320 the two thousand and sixteen housing boom, developers have aggressively 0:04:27.400 --> 0:04:30.679 took on debts to expand their land bank to push 0:04:30.800 --> 0:04:34.640 for more sales growth, until the government introduced the Three 0:04:34.640 --> 0:04:38.800 Red Lines in which limits their debt metrics. You know 0:04:38.880 --> 0:04:42.760 that for those who can't deliverage the balance ship quickly 0:04:42.880 --> 0:04:45.640 like ever grant, that leads to the failure and you know, 0:04:45.960 --> 0:04:48.560 and later a rise bread liquidity crisis for a lot 0:04:48.640 --> 0:04:53.039 of other private Chinese developers. Christie, a plane crash never 0:04:53.080 --> 0:04:56.480 has a single cause. Plane crashes are usually the result 0:04:56.560 --> 0:04:58.640 of many things going wrong, all at the same time, 0:04:58.800 --> 0:05:02.680 sometimes and after the other. Would you say that describes 0:05:02.760 --> 0:05:06.960 China's housing crisis For China, it's more like a slow 0:05:07.120 --> 0:05:12.600 motion crash um. You know, economists experts have been calling 0:05:12.640 --> 0:05:16.040 on a crash on the property market for many years, 0:05:16.120 --> 0:05:18.800 and a lot of people, you know, saw that coming, 0:05:19.360 --> 0:05:23.280 and a lot of people would think that the regulators 0:05:23.279 --> 0:05:28.240 could have done something earlier to prevent or to to 0:05:28.240 --> 0:05:31.120 to drive a soft landing of the sector. I would say, 0:05:31.120 --> 0:05:34.840 you know, it's a combination of regulations coming to too 0:05:34.920 --> 0:05:40.279 two late, and also developers taking excessive risk and homebuyers 0:05:40.400 --> 0:05:43.520 who have the rosy pictures of home prices would just 0:05:43.600 --> 0:05:46.760 keep on going up forever, and you know, pouring a 0:05:46.800 --> 0:05:50.400 lot of money into investment demand or investing in property 0:05:50.920 --> 0:05:53.640 thinking that prices will keep on going up and until 0:05:53.760 --> 0:05:57.159 the party is over. In so Christie, you're saying that 0:05:57.240 --> 0:06:01.520 Chinese developers have one point for trill and dollars in debt. 0:06:01.600 --> 0:06:05.320 That's a huge figure. How many of these developers in 0:06:05.400 --> 0:06:08.719 default everyone's heard of ever, grand I think also SMA 0:06:08.880 --> 0:06:11.840 as well, can you give us an indication of how 0:06:11.880 --> 0:06:14.520 many of these developers will even be around in five 0:06:14.600 --> 0:06:18.599 years time? Right? You know, um, with the developers that 0:06:18.720 --> 0:06:22.839 have you know, issued dollar bonds, we have tracked that, 0:06:22.880 --> 0:06:25.600 you know, around two thirds of them have been struggling 0:06:25.680 --> 0:06:29.640 with repayment of the debt, and that could pave the 0:06:29.720 --> 0:06:32.919 way for you know, a more permanent structural change of 0:06:32.960 --> 0:06:35.800 the sector, because in a few years you'll see, you 0:06:35.880 --> 0:06:38.680 know a lot of these private Chinese developers, they could 0:06:38.680 --> 0:06:41.360 be going out of business. You know, they are undergoing 0:06:41.360 --> 0:06:46.239 the restructuring process, and these developers are no longer buying 0:06:46.320 --> 0:06:50.239 new plots of land, which also shows you the way 0:06:50.360 --> 0:06:54.480 where home cells are going. Christie, we already know how 0:06:54.560 --> 0:07:00.080 much damage the property crisis has done to homeowners, to borrowers, 0:07:00.120 --> 0:07:02.599 and to the developers. But is there a threat of 0:07:02.640 --> 0:07:06.640 a wider contagion that could possibly engulf banks or other 0:07:06.760 --> 0:07:11.200 lenders and investors. The case in China is different versus 0:07:11.280 --> 0:07:14.320 the US is you know, China control a lot of 0:07:14.320 --> 0:07:17.960 the largest lenders, and with the mid November rescue plan, 0:07:18.200 --> 0:07:23.120 we are seeing that the government is telling lenders to 0:07:23.680 --> 0:07:28.840 extend mortgage payments. We schedule the mortgage payments with bias 0:07:28.920 --> 0:07:32.120 who you know could be struggling with unemployment due to COVID. 0:07:32.520 --> 0:07:35.760 So it seems that the government is taking the stands 0:07:35.840 --> 0:07:38.119 that you know, to for banks to offer more grace 0:07:38.200 --> 0:07:42.960 periods to homebias and borrowers. So the mortgage delinquency in 0:07:43.280 --> 0:07:47.280 China right now is still a very minimal number at 0:07:47.320 --> 0:07:50.280 around one percent. And also at the same time, if 0:07:50.320 --> 0:07:54.600 you look at the residential mortgage backed securities issuance in China, 0:07:55.040 --> 0:07:57.800 the size is very small. It amounts to about two 0:07:58.280 --> 0:08:02.160 GDP and that compare still around fifty pc of GDP 0:08:02.280 --> 0:08:05.560 in two thousands seven during the US A prime crisis. 0:08:05.920 --> 0:08:09.440 And it means that a failure in the housing market 0:08:10.000 --> 0:08:14.840 may not transmit the risk to the securitization market in 0:08:15.080 --> 0:08:19.120 China as it was the case in the US. Christie, 0:08:19.120 --> 0:08:22.960 what has this done to the Chinese middle class longstanding 0:08:23.120 --> 0:08:27.480 faith in home ownership? I would say that the government 0:08:27.520 --> 0:08:31.360 needs to work on you know, restoring that faith in 0:08:31.440 --> 0:08:34.120 home ownership. You know, in one way or another, the 0:08:34.160 --> 0:08:37.600 precurs model has to go. So the government can either 0:08:38.120 --> 0:08:42.360 pit fit to you know, the construction of completed homes 0:08:42.360 --> 0:08:45.439 for sales, or instead of you know, having home bias 0:08:45.480 --> 0:08:48.800 paying upfront for a pre sol unit, you know, have 0:08:48.920 --> 0:08:54.480 them pay in installments to offer some sort of consumer protection. Christie, 0:08:54.520 --> 0:08:56.719 how long will it take for China to get out 0:08:56.760 --> 0:08:59.080 of this mess? When I look at the US after 0:08:59.120 --> 0:09:02.120 two tho E two thousand and nine financial crisis, it 0:09:02.200 --> 0:09:05.640 appeared that they went through a big V shaped recovery. 0:09:06.080 --> 0:09:08.760 In the US, it took around sixteen years for new 0:09:08.800 --> 0:09:12.480 home cells to reach the peak levels originally set in 0:09:12.480 --> 0:09:15.760 two aouser and five. But for China, home cells in 0:09:15.840 --> 0:09:18.319 our view might never make it back to the pre 0:09:18.400 --> 0:09:21.200 crisis peak. You know, that is based on you know, 0:09:21.320 --> 0:09:24.560 four structural changes in China. On one hand, you see 0:09:24.559 --> 0:09:29.360 investment demand is shrinking. Chinese households has always feel property 0:09:29.400 --> 0:09:31.559 as a one way bad and that has been the 0:09:31.600 --> 0:09:34.080 case during two thousand and fifteen to two thousand and twenty, 0:09:34.080 --> 0:09:36.680 when home prices are up five to ten a year 0:09:37.800 --> 0:09:42.960 until when you know, things started tumbling down. Of the 0:09:43.000 --> 0:09:46.959 seventies cities, fifty five cities have home prices going down, 0:09:47.280 --> 0:09:50.080 and no one wants to know potential home bias. Want 0:09:50.160 --> 0:09:52.839 to catch a failing knife. And in the medium term 0:09:53.080 --> 0:09:56.040 for the government has been harping on so long on 0:09:56.120 --> 0:09:59.320 the mantra of housing is for living in, not for speculation. 0:10:00.120 --> 0:10:03.120 And number two, we have seen headlines of shrinking population 0:10:03.160 --> 0:10:06.000 in China and that is going to erow first home 0:10:06.440 --> 0:10:10.240 and upgrade demand for Chinese homes. And number three, the 0:10:10.400 --> 0:10:14.320 government is also driving the push for rental housing, so 0:10:14.600 --> 0:10:18.040 that is going to divert demand away from private home cells. 0:10:18.320 --> 0:10:21.160 And lastly, I talked about two thirds of private developers 0:10:21.240 --> 0:10:24.920 might not be surviving in the medium term, and that 0:10:25.040 --> 0:10:27.360 means that a lot of the supply that has been 0:10:27.360 --> 0:10:30.680 coming to the market might not be coming in the 0:10:30.760 --> 0:10:35.160 coming years. Christine made a very interesting point how China's 0:10:35.200 --> 0:10:38.240 population is declining for the first time in six decades. 0:10:38.679 --> 0:10:41.679 What's going on in China Chinese couples not getting married 0:10:41.720 --> 0:10:43.720 and not having babies, and how is this going to 0:10:43.760 --> 0:10:46.760 impact the housing market? Right, So, on one hand, we're 0:10:46.800 --> 0:10:50.480 expecting fewer new babies and that is going to affect 0:10:50.520 --> 0:10:53.600 the next generation of home bias. And then on the 0:10:53.640 --> 0:10:56.040 other hand, we're talking about less marriages. If you look 0:10:56.080 --> 0:10:59.839 at one person household in China, the numbers has been 0:11:00.280 --> 0:11:04.439 you know, to seventeen in one versus just eight percent 0:11:04.480 --> 0:11:07.720 in two or four, and you know it normally requires 0:11:07.720 --> 0:11:11.680 a couple to pull together, they say things for dunk payment. 0:11:12.120 --> 0:11:15.880 So if there blessed people getting married also might impact 0:11:15.920 --> 0:11:20.559 first home demand. Looks fast forward one year, two years, 0:11:20.600 --> 0:11:23.880 maybe five years in the future. What does China's property 0:11:23.920 --> 0:11:26.920 market look like to you? Right? So, I think it 0:11:26.960 --> 0:11:32.319 would be characterized by um a market with home cells 0:11:32.320 --> 0:11:36.959 and home prices being relatively stagnant. If I compare with 0:11:37.000 --> 0:11:39.679 the US, we see home cells going back up to 0:11:39.840 --> 0:11:43.679 pre crisis level after sixteen years. We also see almost 0:11:43.720 --> 0:11:47.079 fee shade rebound for home prices, home prices that almost 0:11:47.080 --> 0:11:50.440 stubbled in the thirteen years since the financial crisis. That 0:11:50.559 --> 0:11:54.400 might never happen to China, and that are the factors 0:11:54.440 --> 0:11:59.560 contributing to you know, a relatively flatish home cells and 0:11:59.600 --> 0:12:02.839 home price in the medium term. That would entirely change 0:12:02.880 --> 0:12:06.640 the picture of how people feel Chinese developers. Chinese developers 0:12:06.679 --> 0:12:09.400 in the past few years that bonds. That equities have 0:12:09.480 --> 0:12:12.640 attracted a lot of interest because of the strong earnings growth, 0:12:12.920 --> 0:12:15.559 and that is not going to come back for these developers. 0:12:15.559 --> 0:12:19.040 They have to rethink that business model for home sells, 0:12:19.080 --> 0:12:21.240 you know, that could be on the trajectory of a 0:12:21.320 --> 0:12:26.520 projected contraction. They have to increasingly diversify into new businesses. 0:12:26.559 --> 0:12:29.400 They need to go into retail leasing, they need to 0:12:29.440 --> 0:12:33.040 go into construction management or property management. They need to 0:12:33.040 --> 0:12:35.800 find new businesses to drive their earnings growth. And in 0:12:35.880 --> 0:12:39.319 terms of market structure, we're seeing that I've talked about 0:12:39.320 --> 0:12:42.720 how to third of the private developers might not be 0:12:42.840 --> 0:12:46.199 in business in five to ten years. You know, they 0:12:46.240 --> 0:12:49.040 are caught in the debt trouble. They're undergoing the debt 0:12:49.040 --> 0:12:52.440 restructuring and that business might never make a comeback. And 0:12:52.760 --> 0:12:56.320 the Chinese property sector will be dominated by stay owned 0:12:56.360 --> 0:13:00.320 developers and just a few private players like Country Arden 0:13:00.559 --> 0:13:05.720 or long Fall that have been able to survive. Christie, 0:13:05.920 --> 0:13:09.360 how important is the housing market to the Chinese economy 0:13:09.480 --> 0:13:14.319 right now? Right? So, just on the housing market itself, 0:13:14.600 --> 0:13:18.360 real estate investments made up around fourteen of China's GDP 0:13:19.200 --> 0:13:22.600 and this is a much bigger ratio versus the US 0:13:22.720 --> 0:13:25.199 during the supreme crisis. You know, it's just around five 0:13:25.240 --> 0:13:28.760 percent of GDP, so it means that housing market crash 0:13:28.960 --> 0:13:31.839 it could be a bigger blow to China's real economy 0:13:32.080 --> 0:13:35.280 and the actual impact could be even bigger because if 0:13:35.320 --> 0:13:42.280 you include also the upstream and the downstream industries like materials, constructions, furnishing, 0:13:42.679 --> 0:13:47.480 and renovation, you name it, that it's going to affect 0:13:47.520 --> 0:13:50.000 you know, a bigger amount of GDP and people who 0:13:50.120 --> 0:13:53.240 employ in those sector. So hold on, Christie, you're saying 0:13:53.280 --> 0:13:57.320 that China's current housing crisis is almost three times bigger 0:13:57.679 --> 0:14:00.720 than the US during the financial crisis in two thousand 0:14:00.720 --> 0:14:04.400 and eight. It is. But the good news for China's 0:14:04.480 --> 0:14:08.960 is that though the housing market crisis could be just 0:14:09.080 --> 0:14:13.000 contained within the sector, that compares to the US where 0:14:13.080 --> 0:14:17.319 you know big NBAS losses that might have not happened 0:14:17.360 --> 0:14:21.120 to China because NBAS only accounts for around two p 0:14:21.440 --> 0:14:25.680 of China's GDP. Christie, think about how China's property crisis 0:14:25.760 --> 0:14:31.800 has impacted attitudes toward homeownership. Has something fundamentally changed. I 0:14:31.840 --> 0:14:36.000 think that perception of investing in property could have been 0:14:36.080 --> 0:14:41.480 changed irrevocably um Chinese people has been selaced about investing 0:14:41.520 --> 0:14:44.360 in property, and they always think of property as a 0:14:44.400 --> 0:14:47.120 one way back and that has been true during two 0:14:47.120 --> 0:14:50.160 thousand and fifteen to twenty when prices go up by 0:14:50.200 --> 0:14:53.840 five to ten percent a year. Until now this is 0:14:53.880 --> 0:14:56.760 no longer the story. You know, our of seventy cities, 0:14:57.040 --> 0:15:01.000 fifty five cities are having down trend in home insis 0:15:01.040 --> 0:15:04.360 and people are adjusting the expectation. You know, they are 0:15:04.400 --> 0:15:07.800 now thinking of property as an asset that has very 0:15:07.840 --> 0:15:11.360 limited upside. But right now they might have to be 0:15:11.760 --> 0:15:16.160 rethinking the allocation of investments. And within China there's very 0:15:16.200 --> 0:15:18.640 limited investment options. You know. You can think about the 0:15:18.680 --> 0:15:23.080 shot market, you can think about bank deposits, wealth management products, 0:15:23.880 --> 0:15:27.240 and then there's the property sector that you can invest in. 0:15:27.520 --> 0:15:30.840 And unfortunately for a lot of Chinese people, you cannot 0:15:30.960 --> 0:15:35.200 invest overseas because of capital control. Yea, Christie. You know, 0:15:35.280 --> 0:15:38.840 China is an extremely vast economy. It's got one point 0:15:38.880 --> 0:15:43.040 four billion people. Is the dire housing situation the same 0:15:43.120 --> 0:15:47.760 across all the different cities in China, So it's a 0:15:47.880 --> 0:15:50.600 very different stories for the different housing markets. You know, 0:15:50.640 --> 0:15:55.120 we have read headlines about China shrinking population and if 0:15:55.120 --> 0:15:58.000 you look at the largest cities like han Jo, which 0:15:58.000 --> 0:16:02.840 is the headquarter of Ali Baba. Population of Hanjo is 0:16:02.840 --> 0:16:05.520 still up seven percent a year in the past five years. 0:16:06.080 --> 0:16:09.920 And if you look at it this way, population inflow 0:16:10.160 --> 0:16:13.240 is key to drive demanded for those housing markets, and 0:16:13.280 --> 0:16:16.680 that compares with smaller cities. They're facing population outflow and 0:16:16.720 --> 0:16:20.400 there's also weakening investment demand and a lot of oversupply 0:16:20.560 --> 0:16:24.400 of infantries in those cities, and that is going to 0:16:24.920 --> 0:16:29.200 cast a shadow over the investment prospect of smallest cities 0:16:29.320 --> 0:16:33.000 housing market where you see you know, prices facing the 0:16:33.000 --> 0:16:38.400 biggest pressure and sells also coming down. A famous US 0:16:38.480 --> 0:16:42.920 president once told Americans during troubled times that the only 0:16:43.000 --> 0:16:47.000 thing we have to fear is fear itself. Is that 0:16:47.040 --> 0:16:50.239 the case in China's housing crisis. Are buyers and borrowers 0:16:50.560 --> 0:16:53.400 letting fear feed on itself or do you think there's 0:16:53.440 --> 0:16:56.680 more to it? I think the biggest problem in the 0:16:56.760 --> 0:16:59.720 Chinese property market right now is very hard to find 0:16:59.760 --> 0:17:04.159 will link bias. Home bias are increasingly worried about if 0:17:04.240 --> 0:17:07.000 I'm putting money on a print of property today, is 0:17:07.040 --> 0:17:09.200 that going to be delivered in two to three years? 0:17:09.640 --> 0:17:14.119 And with the government's rescue also stopping short of rescuing 0:17:14.160 --> 0:17:17.440 a lot of these distrest developers. You know, the the 0:17:18.040 --> 0:17:21.800 situation is not improving and the damage to home biased 0:17:21.840 --> 0:17:25.080 confidence is already done and it's very hard to see 0:17:25.440 --> 0:17:29.800 how is that going to recover? Christie final question, would 0:17:29.800 --> 0:17:32.600 you buy a house in China right now? And if so, 0:17:32.800 --> 0:17:35.920 which city would you buy in? I think the answer 0:17:36.240 --> 0:17:38.560 I always would have for that question is to be 0:17:39.119 --> 0:17:43.000 shan Jan, which is the headquarter of Huawei and ten 0:17:43.119 --> 0:17:46.720 cent um. It is the Silicon valley of China, and 0:17:47.560 --> 0:17:50.280 buying property is always about looking at supply and demand. 0:17:50.320 --> 0:17:53.320 It is a city with very limited lens supply and 0:17:53.480 --> 0:17:56.480 a lot of demand because of population inflow into the 0:17:56.520 --> 0:17:59.920 city because of you know, economic prospect and job opportunities. 0:18:00.000 --> 0:18:03.280 So with the latest run of adjustments and you know, 0:18:03.480 --> 0:18:06.560 some downtrend in prices, it could be a good entry 0:18:06.600 --> 0:18:10.760 point to think about infesting in a property in chian Gin. 0:18:10.920 --> 0:18:12.560 And it's also the case for you know, a lot 0:18:12.600 --> 0:18:15.560 of the tier one cities in China. I would avoid 0:18:15.760 --> 0:18:19.080 low tier cities um as you say, you know, ghost tanks, 0:18:20.000 --> 0:18:23.320 a lot of supply and population outflow and very weak 0:18:23.359 --> 0:18:27.560 investment demand, meaning that these properties would continue to face 0:18:27.600 --> 0:18:33.119 price pressure. Christie Hung, senior analyst with Bloomberg Intelligence. Christie, 0:18:33.119 --> 0:18:35.760 it's a remarkable story what's happening in China, and it 0:18:35.800 --> 0:18:37.680 sounds like there's gonna be a lot more to talk 0:18:37.720 --> 0:18:40.680 about before it's all over. Thanks Tom, and thanks John. 0:18:40.760 --> 0:18:44.400 It's great to be here. I'm Tom Corbett in Hong 0:18:44.480 --> 0:18:47.240 Kong and I'm John Lee. And you've been listening to 0:18:47.280 --> 0:18:48.720 the Asia Centric podcast.