Categorized | International

Chinese Real Estate Declines May Impact Nations Around the World

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Analysts are now beginning to worry that the overall decline in China’s real estate market may soon begin to have a significant impact on the rest of the world. The impact may extend beyond the real estate market, and move into the commodity market worldwide.

The declines in China’s market have largely been due to governmental policies that have been enforced in China. The government has prevented homeowners across the country from buying second homes. They have also made borrowing exceedingly difficult by raising down payment requirements to astronomical levels. Furthermore, the Chinese government has enacted various property taxes.

The government has enacted some stringent policies in an effort to avoid a housing bubble that has essentially crippled the United States and parts of Europe. However, analysts believe that their actions have actually created the housing bubble that the Chinese government was trying to avoid.

With developers in China now facing immense struggles due to a lack of growth in the housing market, many economic experts around the world believe that the recent declines in China’s housing market will have a tremendously negative effect on commodities used for construction, such as cement, steel, and concrete.

Developers in China have opted to slashing prices and even giving away major incentives to attract homeowners. However, more than one hundred thousand properties continue to sit on the market, as many potential homebuyers find themselves unable to buy due to one of the various governmental restrictions.

Analysts fear that prices could drop another fifteen percent or more, having detrimental consequences for other markets around the world. The actual magnitude of the decline, though, has truly yet to be seen. However, many analysts believe that China will continue to enforce its policies throughout the coming months.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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