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Comment by EarthMephit | Hacker News Reader

In Vancouver, a western property market generally considered as overheated and overpriced, the house price to income ratio is 7.8

In China's major cities, the price-to-income-ratio is around 40 or 50.

These are figures considered inconceiveable in Western countries, so its understandable why economists think that this is unsustainable.

To make matters worse, in China you only lease the property for 80 years, you don't own it.

So in summary you pay 50 years of a full income to get an 80 year lease on a property.

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80 year lease seems to be a relatively good thing overall (devil in the details as always) and an escape hatch of sorts. Otherwise some early property owners would get very rich for no reason.

edit: after looking into it is seems they're slowly backing out of this idea that the land belongs collectively to the state after 80 years which perhaps partly explains the real estate fever as more people come to believe they'll own the land in perpetuity.

Can you share anything specific about changes to this land policy? I have no knowledge of how this sort of leasing arrangement works in China or elsewhere (Singapore, etc).

Yeah the problem is people are speculating that the lease lasts forever. Having land go back to the state every now and then is supposed to undo and discourage land grabbing. The ultra long lease duration however is counterproductive.

> In Vancouver, a western property market generally considered as overheated and overpriced, the house price to income ratio is 7.8 > In China's major cities, the price-to-income-ratio is around 40 or 50.

None of these are applicable: In any megapolis that people flock to, property prices skyrocket. This is not something unnatural or artificial. It would be inflated, yes, but it wouldnt be like what the US banking and investment sector did with subprime mortgages. It was an outright scam, and the real scam was not in the subprime lending - it was in the derivatives that were created based on those shaky assets.

There is no such situation in either China, in San Francisco, in Tokyo or any such place. People are cramming into various cities and regions, and causing prices to skyrocket.

> These are figures considered inconceiveable in Western countries

Of course. One 'tier 3' city in China is 10 million people. In the US, that would be a megapolis. In China its just tier 3. The scale is too different.

> None of these are applicable: In any megapolis that people flock to, property prices skyrocket

In New York City the price-to-income-ratio is still under 10. Chinese cities are severely overpriced.

>To make matters worse, in China you only lease the property for 80 years, you don't own it.

Don't you think a shorter lease would have reduced the housing prices? 80 years means a lot of people value it as permanent, so no it doesn't make matters worse that it eventually expires, it makes matters worse because people treat it as if it doesn't.

Wait…there isn’t personal ownership of Real Property in China?

If you didn't know that, there is SO MUCH more to discover. It's not just an alternate political system... It's a while different world about which most in the West have no comprehension.

I thought it was the same now in parts of Europe like London too?

It can vary. Part of land can be rented and part sold. There might be clauses for buying the land outright. Even partially.

On other hand the funding model of local governments in China is entirely different than in west. Main source of revenue has been selling land use rights for development.

I thought in London most of the real estate is already owned by the Crown Trust (formerly the regent) and not available for sale.

How does a real estate market blow up when you aren’t buying the assets?

Market forces — just different ones.

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