Should we fear a housing crash in Asia?

"Investors should sell their property values: a means to reduce the risk of explosion of a bubble in the wake of the outbreak last year, 155% of the real estate sector." The recommendation of the Morgan Stanley sounds like a point of caution: it is urgent to sell its real estate securities listed on the site of Shanghai!

Certainly, especially as an investor, you do not hold title to real Chinese groups, but since this is happening now outside of France may have implications for your investments, it becomes necessary keep abreast of trends in foreign markets.

China, Singapore, South Korea ... the housing bubble inflated in Asia
If the Chinese real estate are overvalued is that the real estate market of the Middle Kingdom continues to rise. "Recently, reports are increasing on soaring house prices in major Chinese cities, reports the China Daily Xinwen Chenbao. "In Changchun (North) and Nanning (southwest), house prices register record after record and meet peaks in Beijing, Guangzhou and Hangzhou (south-east)."

China is not alone in facing such an increase in real estate. Singapore, South Korea, Indonesia are not far behind. In Singapore, sales of homes completed during the first seven months of the year were 2.3 times higher than in 2008 at the same time, especially in the capital, where real estate prices have increased d 'third.

In South Korea, the situation is almost identical house prices have risen steadily over the last five months in Seoul, prices were up 20% since early 2009.

Abundance of liquidity
Why such a housing boom in Asia (excluding Japan)? Many economists point to the abundance of liquidity issues, including recovery plans. Asian countries have turned the printing press and opened the credit tap.

In China, the country has not only implemented a recovery plan providing 4 000 MdsҰ (461 billion euros) but also left its banks allow up to 8 670 MdsҰ (849 billion euros) credits during the first nine months of the year. But a significant portion of these loans was invested in the stock market, especially in real estate. "Because of the decline in profitability over the past two years, some state enterprises engaged in manufacturing and exporting have decided to increase their investments in real estate," admits a Chinese official.

On the other hand, we must emphasize the impact of the arrival of foreign capital on the Asian property markets. The World Bank, "capital for an amount estimated at tens of billions of dollars have recently flocked to East Asia, which may cause a bubble in some stock and housing markets in the region. International investors and rely on a more rapid recovery of the most dynamic economy in the world, but also on a possible revaluation of the yuan. Meanwhile, housing prices continue to rise.

And if the bubble burst?
"The world would be very difficult," said Jacques Attali about the bubble forming in China. If a property crash occurred in this country, a second systemic crisis would be inevitable, with consequences far more serious for the economy and the wealth of investors.

Remember, because of the current crisis, the fortunes of five hundred French richest fell 27% in one year, depending on the site ladepeche.fr! But the likelihood of that crash remains low in the ten to fifteen years to come: China needed urban housing.

Today, its urbanization rate is 45%. To achieve a target of 65% by 2025, it will build each year, enough to accommodate between 15 and 20 million people. "This means that for ten to fifteen years, he must build each year a city as important as London or New York," said one Chinese sociologist. He added: "The program is part of urbanization in the Chinese strategy of development of domestic consumption."