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It might not be a good idea to let property price fall!
Property is almost 50% of the wealth of the people.|
Letting Property price fall will destroy wealth.....
and the possibility of building even bigger cities faster!
What we can do is to provide "cheaper housing" in satellite suburbs!
and then let the price of the property appreciate.
Imagine MR. ZHANG, aged 30....
He earns Rmb80,000 a year...and buys a property worth Rmb330,000!
He pays Rmb30,000 a year to repay a Rmb300,000 mortgage!
He supports the BANK, Construction company, Real Estate developers (who markets the homes) and owning a home means, he needs to buy FURNITURE, INTERIOR DECORATORS, kitchen, electrical and electronic products....
thus creating more city business....
His home increase in value to Rmb360,000 the next year...
His income still Rmb80,000 but in actual effect, it has become Rmb110,000 income with almost Rmb30,000 tax free increase in his income....and Mr. Zhang feels rich.....and have a sense of happiness!
Then new REAL ESTATE developer build another batch of Rmb300,000 homes in a new more outlying area...which has cheaper land
and more people buys, earning income from consumers like Mr. Zhang!!!
In about 10 years time, Mr. Zhang income increases to Rmb120,000....his property now is worth Rmb600,000...appreciate Rmb300,000..and he uses his savings to pay off the remaining mortgage of probably Rmb100,000!!!..
Mr. Zhang now has 2 children and a pretty fat wife.....
So he buys an investment income in the CITY CENTER....
a smaller home.......Rmb1.0 million and borrow Rmb700,000.....complete with swimming pool etc....and rents it out to a Taiwan Expatriate family for Rmb6,000 a month
His repayment now becomes Rmb100,000 a year, 70% financed by the rental and the remaining 30% from savings! He still has SAVINGS in the City Provident fund which has invested money in MUTUAL funds....
When Mr. Zhang reaches 55! He becomes semi retired and now spends time on CD BBS and find its fulfilling in helping the motherland grow with some of his input!
He has his 1st apartment, now worth Rmb800,000...
and his CITY CENTER investment home, now worth Rmb1,500,000
and his PROVIDENT FUND pays him Rmb500,000....
and his income is now solely from rental Rmb120,000 and interest from his provident funds cash...Rmb20,000......
God Of Prosperity
note: its better to build cheaper homes in lower cost satellite town....
[ Last edited by greendragon at 2006-9-19 02:03 PM ]