The Chinese real estate market continues to be in a state of turmoil. Commercial and residential sectors both are suffering from the same issues, following a pattern similar to the American market from 2008 and 2009. Lending standards were relaxed and credit was made cheap, leading to an economy-wide build-up of debt. This combined with under-regulation and a large portion of consumer wealth invested in speculation, has resulted in the current crisis.
The effects of the crisis have been devastating. Property sales have slowed considerably, prices have declined sharply, and buyers are remaining on the sidelines. The government, in order to reverse these trends, has been introducing measures to reduce debt and inject liquidity, for example lowering mortgage rates and giving more lenient terms to qualified buyers. In addition, regulations are being put in place to curb speculation and promote transparency.
Most Important Elements:
– Chinese real estate market is in a state of turmoil
– Pattern similar to US market 2008-2009
– Lending standards and credit relaxed, owe economy wide
– Property sales slowed, prices declined, buyers sitting out
– Government measures to reduce debt and inject liquidity, new regulations to curb speculation and promote transparency
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