Categorized | International

Housing Prices in China Could Drop Thirty Percent

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As the Chinese government continues its stringent restrictions on the nation’s housing market, analysts now believe now residential real estate prices could fall as much as thirty percent next year. China’s largest cities will likely face the largest declines.

China’s government had initially instituted such strong restrictions in order to prevent the growth and eventual burst of a housing bubble. Although the nation’s housing market is expected to fall as much as thirty percent, many real estate analysts are careful not to label the drop as the bursting of a housing bubble. Rather, they are considering the large drop to be a correction of pricing in the residential real estate market.

The government has indicated that it will reverse the currently imposed restrictions if prices drop as much as twenty percent. The current restrictions, which called for an increase in down-payment requirements, as well as mortgage rates, have hit developers fairly hard. New housing sales and residential construction are both down more than thirty percent in the last year. As a result, many developers will likely receive a massive credit downgrade.

Real estate agencies in China are facing similar difficulties, and as such, many have announced layoffs for the upcoming year. Despite the consequences that have resulted, many analysts in China have applauded the government’s efforts to curb housing prices. They believe that the actions will be a significant reason as to why China will avoid the same struggles that the United States is currently facing. Whether their beliefs will remain true has yet to be seen.

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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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