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Growing Property Supply in China Worries Economists

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Housing inventory levels continue to soar, as fewer homes are being sold in China’s residential real estate market. Economists are now worrying that the massive boost in property supply may cause housing market to collapse throughout Asia.


During the Lunar New Year holiday, housing sales plummeted across various cities in China. Shanghai experienced roughly thirty sales per day, well below its three hundred and fifty-seven per day average. Beijing didn’t even see the sale of one new apartment during the holiday week.


Since the Lunar New Year holiday week, housing sales remained uncharacteristically low at roughly thirty percent below the already deflated levels from December. Consumer confidence in the housing market is crumbling, and more buyers are almost certain that they can buy at a better price if they wait for some time. With that said, the condition of the market is eerily similar to that of the United States falling the big residential real estate crash.


According to most economists, there is no clear defined end in sight as to when the property market will finally hit rock bottom. The government has shown no signs of letting up on the imposed property restrictions. Economists believe that local governments may have to act on their own to buy unoccupied properties in order to prevent the complete crash that the national government had intended to avoid.


While the imposed property restrictions have been effective with respect to the reduction of prices, they have also caused a massive glut in supply inventory. As such, their actions could potentially lead to the crash that they were trying to prevent in the first place.

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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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