It appears that Shanghai property prices are again rising in 2009. People were saying this was a property bubble back in 2005, but the prices just kept going up. Check out this 2005 article: http://www.businessweek.com/magazine/co ... 954072.htm It implies that Shanghai property is in a bubble and that Chinese banks may collapse (nice irony there). Back then average Shanghai price per square meter is about 600 usd, now it is around 2800 usd.

There seems to be no relationship between prices and either rental yield or average income in this city. This indicates that people are buying with the expectation of more ponzi style capital growth.

The thing is, I cant see this coming to an end. I would have thought that such gains would eventually correct, but that doesn't seem to be the case for the last 5 years, so I cant see why it will now.

Are you guys bearish or bullish over the next 5 years?

... and had anyone followed the 2005 advice about the bubble that was forming, they would have missed out on some on the best returns of the past decade...

If one looks at the estate market of Shanghai as a whole, it is not difficult to see that the price for industrial space and office does not grow that much.

Residential properties in Shanghai are all over-priced currently. Even a slum flat will cost more than 1M. But I am not sure if they are bubbles or not. This year's sudden rebounce of residential estate selling owes much to the SUPER LIQUIDITY on the market (+ people's expectation of inflation, + people's intuitive fear of the increase of the price of residential asset, + the strong wealth effect manifested ). And there is a price for the madness of the market sooner or later. In fact, there was a correction at the end of 2008 and early this year, but lasted too short.

... and had anyone followed the 2005 advice about the bubble that was forming, they would have missed out on some on the best returns of the past decade

...
And they said the same thing in the US 10 years ago. Its fine if you know when to get out.

Michael wrote:

... and had anyone followed the 2005 advice about the bubble that was forming, they would have missed out on some on the best returns of the past decade

...
And they said the same thing in the US 10 years ago. Its fine if you know when to get out.

Yes but few people do. Its amazing that so many people that made money in property in the boom years attribute their gains to their own shrewdness and skill rather than just being in the right place at the right time.

Just made a nice 22% interest in selling my home last night

Michael is right. All asset bubbles eventually burst. If you time it right and don't get to greedy they can be your friend, if you wait too long it can break you. When you price 90% of the working class out of the market, it's not going to last because there isn't liquidity. No one to sell to. You can have great paper wealth but if there are no buyers, you still go broke.