Is China’s housing market about to crash?

Government restrictions are having an impact

New York /
Jan.January 17, 2018 10:00 AM

Beijing (Credit: Nikolaj Potanin via Flickr)

Is China about to get its own version of a mortgage crisis? Chinese home prices are starting to fall amid new government restrictions, and some observers worry that homeowners overloaded with debt could run into trouble.

Property prices in Beijing and Shanghai fell by 0.3 percent between November 2016 and November 2017 after years of double-digit growth. Prices in cities like Shenzhen, Wuxi and Hangzhou are also falling.

The Chinese government previously increased down payment requirements and mortgage rates in a bid to cool the housing market, but some observers worry about homeowners ending up under water. “The more vulnerable side of the household sector is home buyers who are buying just against their own earning power and don’t have that family wealth,” PNC economist Bill Adams told the Wall Street Journal. “Often it’s people who come to major cities from smaller towns and from the countryside.”

In recent years the housing market accounted for about a third of China’s GDP growth, according to Moody’s Investor Services.

The good news is that Beijing could always loosen housing market regulations to boost prices, and that China lacks the kind of mortgage-based financial products that almost brought down the U.S. financial system in 2008, the Wall Street Journal reported. [WSJ]Konrad Putzier


Related Articles

arrow_forward_ios
Risa Heller and Jonathan Rosen launched NY Forever earlier this week. (Risa Heller, Berlin Rosen)
Civic boosterism gets big backing from real estate
Civic boosterism gets big backing from real estate
Lewis Road Residential Planned Development (Pine Barrens, iStock)
Big golf, resi project in East Quogue approved
Big golf, resi project in East Quogue approved
(Illustration by The Real Deal)
Americans bought 5.6M homes last year — the most since the bubble
Americans bought 5.6M homes last year — the most since the bubble
Randy Mastro and 21 East 83rd Street (Photos via Getty; Google Maps)
Former deputy mayor Randy Mastro, lawyer in Lucerne controversy, lists UES home
Former deputy mayor Randy Mastro, lawyer in Lucerne controversy, lists UES home
From left: BSA chairwoman Margery Perlmutter, DRAW Brooklyn founder Alexandros Washburn, New York City Council Member Carlos Menchaca with renderings of the project (Photos via the City of New York, LinkedIn and Arquitectonica)
How a Red Hook developer circumvented the City Council
How a Red Hook developer circumvented the City Council
The bus terminal was built in the 1950s and designed to serve one fourth of the riders it sees today. (Getty)
Port Authority to raze, replace “hell on earth” bus terminal
Port Authority to raze, replace “hell on earth” bus terminal
Overall, the number of housing units that started construction last year was up 7 percent from 2019. (iStock)
Residential construction had busiest year since 2006: MBA
Residential construction had busiest year since 2006: MBA
Financial disclosures show extent of Trump Org losses
Financial disclosures show extent of Trump Org losses
Financial disclosures show extent of Trump Org losses
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...