Is a real estate tax finally on the way in China? It would sure shake up the stock market there

China is edging toward a national property tax system. The Ministry of Finance expects to get approval for a pilot program in December to roll out in 2011 in cities such as Shanghai and Chongqing, according to Caixin Online.

There won’t be any decision until after the Central Economic Work Conference ends in December, Caixin reports, but since a property tax system would address some of China’s most pressing economic problems, the report certainly seems credible.

First, a property tax would take some of the hot air out of China’s very speculative real estate market. Read more

If you’re looking for a slowing real estate market in China, you sure won’t find it in Hong Kong

Traders and investors hoping that China will soon loosen financial restrictions designed to cool China’s real estate market won’t find any good news in the August 30 land auction in Hong Kong.

A parcel in Kowloon Tong went for $165 million in an auction run by Hong Kong’s government. That set a per-square-foot record for Kowloon and signaled that the market for luxury properties is still in overdrive.

Hong Kong homes prices are up 45% since the beginning of 2009, but they have fallen 3% since the Hong Kong government put into place new measures to damp price increases on August 13.

The resumption of land auctions—there have been six this year–was one part of that program. The auctions were suspended in 2004 as Hong Kong government moved to support falling home prices. Read more

The consensus is that China has a real estate bubble. The only argument is whether it will burst in some crash that will take down China’s economy or come in for a relatively soft landing that slows China’s economic growth but in no measure extinguishes it.

It’s tough for me to come down on one side of that debate or the other because most of the time the protagonists don’t bother to set out what the bursting of a real estate bubble would look like in China. There’s a kind of unspoken vague agreement that a Chinese bust wouldn’t look like a U.S.-style bust, but no real effort to put real flesh on the bones of a China-style bust.

And without fleshing out what a real estate bust in China would be like, it’s just about impossible to decide the seriousness of that bust or the extent of its consequences.

Let me take a run at that and see if the effort helps settle the crash vs. soft landing debate. Or at least moves it along a bit.

I don’t think there’s any real argument about this: China is in the midst of a speculative rise in real estate prices that can’t be sustained. Read more

Sell Rayonier (RYN)

I’ve already sold Rayonier (RYN) out of the Jubak Dividend Income Portfolio today, May 28. And now I’m selling it out of Jubak Picks as well. Nothing wrong with the stock—when the real estate market does finally turn, this timber and real estate REIT will do quite well. But I think that turn is still a long way away and that investors will see better places to put their money to work—most likely in the world’s emerging stock markets—before then.

I’m looking at a 2% drop in the price of a Rayonier share since I added it to the portfolio on November 9, 2007. On a total return basis—that’s capital gain (or in this case loss) plus dividend payments—I’ve got an 8.4% profit. Read more

China fiddles while real estate market gets ever hotter

I love a good dither. Especially when it’s cloaked in language that makes it sound like decisive action

This morning’s headline in the Financial Times reads “Beijing acts over housing bubble.” Sounds like China did something significant to control an inflating asset bubble that saw housing prices climb at an 11.7% rate in the last year. For context that’s the fastest rate of increase in housing prices since the Chinese government began keeping this data in 2005.

What did Beijing do? Read more