This is pretty important, because, as we know, when a huge housing bubble bursts it takes an economy down with it. China’s Coming Property Bust
So everyone recognizes that a correction must come soon, right? Not exactly. “I don’t see any bubbles,” 44-year-old Zhang Xin told Hong Kong’s South China Morning Post ( SCHPY.PK – news – people ). “The next few months will be a fantastic time to buy.”
Really? There were, a few months ago, 64.5 million urban flats that showed no electricity usage for six consecutive months. That’s one in four city apartments, enough housing for some 200 million people. The value of vacant apartments held by speculators is about 15% of gross domestic product. Beijing’s bank stress tests assume a 60% fall in property prices. In fact, official statistics show that property price increases slowed in July.
64.5 million empty urban flats now, but,
And there is more bad news for the residential market. Property developers, who are already building 20 million flats, have company. Local governments are constructing another 20-30 million, and other government agencies and companies are also building housing for employees.
Real trouble ahead, if China doesn’t manage this properly.