There are fears of a great housing bubble in China

More than $1.4T has been invested in the country’s housing market in the last year

New York Weekend Edition /
Jul.July 19, 2020 12:00 PM
China’s housing market is into bubble territory

China’s housing market is into bubble territory

China’s efforts to beat back coronavirus led to widespread travel restrictions and shutdowns. But it appears to have been just a hiccup for the property boom in its biggest cities.

Home prices continue to rise higher and units are flying off the shelves again. More money was invested last month in Chinese real estate than any other month recorded, according to the Wall Street Journal.

One estimate found Shanghai apartment resales approached a record high in April. A month earlier, 288 apartments at a new development in Shenzhen sold online in less than eight minutes. More than 400 units sold a day later at another new development in the city.

The fervor with which buyers are scooping up units is raising concerns that China’s property bubble is growing bigger by the day. The $1.4 trillion invested into the housing market in the 12 months ending in June is far higher than the annual $900 billion invested into housing in the U.S. housing market at the peak of the bubble before the last financial crisis.

Chinese buyers are also more heavily leveraged than they’ve ever been — in the first quarter, the household leverage ratio hit a record high of 57.7 percent.

Buyers appear confident that the Chinese government won’t let the bottom fall out under the housing market, so they’re confident to keep buying, according to the Journal.

“Property has hijacked China’s economy, so the government wouldn’t dare to push for a plunge in housing prices, even if that’s the most effective way to deflate the bubble,” said Chen Zhiyu, who is hunting for property in Shenzhen. [WSJ]Dennis Lynch 


Related Articles

arrow_forward_ios
Keith Powers, Democratic District 4 representative on the New York City Council, in front of 45 East 45th Street (Getty Images, The Roosevelt Hotel, iStock/Illustration by Steven Dilakian for The Real Deal)
Local lawmakers aim to landmark shuttered Roosevelt Hotel
Local lawmakers aim to landmark shuttered Roosevelt Hotel
(iStock/Illustration by Kevin Rebong for The Real Deal)
Existing home sales hit 15-year high in 2021
Existing home sales hit 15-year high in 2021
From left: Steven Roth, chief executive officer, Vornado Realty Trust; Kathy Hochul, governor of New York; Stephen Ross, chairman and founder, The Related Companies (Getty Images, iStock/Illustration by Steven Dilakian for The Real Deal)
Real estate showers Hochul with cash
Real estate showers Hochul with cash
Gov. Kathy Hochul Lays Out Replacement 421a (Getty Images, iStock, , Illustration by Kevin Cifuentes for The Real Deal)
New name, same basic idea: Hochul pitches 421a reform
New name, same basic idea: Hochul pitches 421a reform
(iStock/Illustration by Steven Dilakian for The Real Deal)
Hochul plan for resi towers is tall order
Hochul plan for resi towers is tall order
From left: Letitia James, attorney general of New York; Donald Trump, 45th U.S. president (Getty Images, Wikipedia/ChrisRuvolo, iStock/Illustration by Steven Dilakian for The Real Deal)
New York AG alleges Trump altered values at 6 properties
New York AG alleges Trump altered values at 6 properties
(iStock/Illustration by Steven Dilakian for The Real Deal)
Black mortgage applicants’ rejection disparity surges
Black mortgage applicants’ rejection disparity surges
From left: Joseph Riever and Christopher Marte (Elizabeth Street Garden, New York City Campaign Finance Board)
After 10-year saga, judge’s delay keeps senior housing unbuilt
After 10-year saga, judge’s delay keeps senior housing unbuilt
arrow_forward_ios

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

Loading...