"An article in The Telegraph may be of interest. It is has some fairly up to date information which may be of interest and comment to subscribers.

"What concerns me is that the consensus view for the last few years has been the BRIC countries and the super cycle and yet the consensus v
iew is most often wrong."

Eoin Treacy's view Thank you for this interesting article from The Telegraph by Ambrose Evans Pritchard who is notable for his cautious attitude towards China. Mrs. Treacy corroborates that Beijing property prices are falling, having spoken to family and friends back home and checking a number of Chinese language websites. This article from Xinhua carries the official / government version of events.

Property developers had been holding out for the last year in the hope that they would be able to sell at higher prices. There were stories that added extras were being thrown in for willing buyers but until recently they refused to budge on price. That changed in the last few months as a number of developers slashed prices on newly built developments by upwards of 25%. Protests ensued from those who had paid higher prices. There is a definite feeling that the property market has peaked.

The Shanghai Property Index peaked in 2007 and rallied impressively from the 2008 low. It ranged with a mild upward bias from May 2010 until June 2011 when it broke the progression of higher reaction lows and has since extended the decline. A sustained move above 3200 would be required to begin to check current scope for additional downside.

Hard landings in the property market are hard to avoid. Prices had gotten to levels in Tier 1 cities which were well beyond the reach of normal people. Government policy has been skewed towards forcing prices down in an effort to bolster social cohesion. If they want to avoid a crash, they will need to quickly lower interest rates, ease the tax burden, give the banks greater leeway to lend and support the consumer. This latter point is perhaps the most important because the export market is likely to remain pressured as long as Europe and the USA remain fiscally challenged. Bold moves will be required to bolster confidence.

From an investment perspective, companies in the luxury goods sector may be considered a bellwether for the health of the Chinese consumer. Most have not been immune from the recent selling pressure and in common with the wider stock market will need to hold above the October/November lows if the upside is to continue to be given the benefit of the doubt.