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

Los Angeles 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
(iStock)
SoCal home prices keep rising while supply dwindles
SoCal home prices keep rising while supply dwindles
PG&E CEO Patricia K. Poppe, San Diego Gas & Electric CEO Caroline Winn and Southern California Edison CEO Kevin M. Payne. (Getty, PG&E, SDGE, Edison)
PG&E among utilities looking to cut subsidies on solar homes
PG&E among utilities looking to cut subsidies on solar homes
(iStock)
Did pandemic really trigger mass exodus from California?
Did pandemic really trigger mass exodus from California?
(iStock)
Southern California housing rush was unabated in January
Southern California housing rush was unabated in January
Orange County, CA (iStock)
SoCal home sales prices and volume surge
SoCal home sales prices and volume surge
Affirmed Housing CEO James Silverwood and the development site (Affirmed, Google Maps)
Affordable developer proposes complex in Chatsworth
Affordable developer proposes complex in Chatsworth
Homebuyers across Southern California continue to gobble up properties
SoCal homebuying surge bumps up against low inventory
SoCal homebuying surge bumps up against low inventory
Southern California home sales rose 27 percent in July compared to June
SoCal surge: Home sales rose 27% in July
SoCal surge: Home sales rose 27% in July
arrow_forward_ios

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

Loading...