In the general meetings of Berkshire Hathaway held in early May this year, Warren Buffett said to the Chinese media that he was determined not to buy houses in China. The reason given was that he did not understand the rules of the game of the Chinese property market.
In fact, as early as May 2010, Buffett said in the interview with the “National Business Daily” that “China’s real estate market is like gambling, and gambling stake is huge involving a group of people in a large area.”
In 1998, the Chinese government introduced a personal mortgage policy; in 2003 the State Council included the real estate as a pillar industry, since then the real estate industry started to attract more and more people in than ten years. However, with this gamble continues to grow under abnormal development, the property market bubble becomes bigger and bigger.
Regarding the future of the Chinese property market, Buffett had said with certainty that “China will face bubble burst regardless of how quickly the economic development is.” China’s leaders had been well aware of this, in order to maintain stable and rapid economic development, in the past decade, the state has introduced a series of regulatory policies targeting at the property market. However, the housing price became higher each time after the implementation of the regulatory policies.
Perhaps one day, Buffett will come back to the Chinese property market, when the property market investment returns to a more rational status.
Source: 每日经济新闻(National Business Daily)