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
Sheldon Silver (Getty; iStock; Photo Illustration by Kevin Rebong for The Real Deal)
Supreme Court declines to hear Sheldon Silver appeal
Supreme Court declines to hear Sheldon Silver appeal
(iStock)
Forbearance rate stubborn among home-mortgage borrowers
Forbearance rate stubborn among home-mortgage borrowers
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
(Illustration by The Real Deal)
How builders are changing America’s suburbs to fit the times
How builders are changing America’s suburbs to fit the times
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 median existing-home price exceeded $300,000 for the first time last year (iStock)
Vicious cycle creates “huge supply crunch,” pushing home prices up
Vicious cycle creates “huge supply crunch,” pushing home prices up
arrow_forward_ios

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

Loading...