China Braces for Pop of Housing Bubble
China Braces for Pop of Housing Bubble
Real estate analysts mostly agree that China is getting ready to experience some of the problems plaguing the US housing market in the next few years, as the world's second-largest economy seems to be experiencing a bursting of its housing bubble. While most insiders do not expect a crash the likes of which the US went through, a number of investment consultants have begun advising clients to cut back their Chinese real estate holdings.
China is not expected to see the sort of rapid decline in home values that the US has seen over the last five years, nor is credit expected to dry up like it has here, but it is going to face some difficulties, and it will take some skillful maneuvering by policymakers to limit the hardships. Chinese officials announced last week the nation will reduce its capital reserve requirements for banks, in hopes of limiting the tightness of the mortgage market. The move boosted stock markets around the world.
In addition to credit, another area that has economists concerned is China's construction industry. Similarly to what happened at the onset of the US housing boom in cities like Miami and Las Vegas, China experienced a 40 percent decline in condominium sales in September, indicating the demand that drove the bubble is declining, and single-family home home sales and price declines are likely to follow suit. The real trick for Chinese officials is how to transform the Chinese economy from a predominantly exporting economy to a consumption-first model.
Real estate analysts mostly agree that China is getting ready to experience some of the problems plaguing the US housing market in the next few years, as the world's second-largest economy seems to be experiencing a bursting of its housing bubble. While most insiders do not expect a crash the likes of which the US went through, a number of investment consultants have begun advising clients to cut back their Chinese real estate holdings.
China is not expected to see the sort of rapid decline in home values that the US has seen over the last five years, nor is credit expected to dry up like it has here, but it is going to face some difficulties, and it will take some skillful maneuvering by policymakers to limit the hardships. Chinese officials announced last week the nation will reduce its capital reserve requirements for banks, in hopes of limiting the tightness of the mortgage market. The move boosted stock markets around the world.
In addition to credit, another area that has economists concerned is China's construction industry. Similarly to what happened at the onset of the US housing boom in cities like Miami and Las Vegas, China experienced a 40 percent decline in condominium sales in September, indicating the demand that drove the bubble is declining, and single-family home home sales and price declines are likely to follow suit. The real trick for Chinese officials is how to transform the Chinese economy from a predominantly exporting economy to a consumption-first model.
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