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It had been forecast for some time with the tightening of lending and monetary restrictions. But as the Wall Street Journal reports housing prices are “stalled” in Beijing and Shanghai and prices are dropping in other cities.
Mansion Global observes “Demand has dried up in these areas as a result of government measures including higher mortgage rates, higher down-payment requirements and limits on buying a second or third home. Would-be sellers are increasingly putting plans on hold in hope that prices will rebound. While China has seen brief property downturns before, the high debt levels that fueled the boom makes this slump a particular risk for China’s economy and the policy makers trying to manage it.”
New home prices have decreased 8 per cent from October through to mid-December, a startling retreat from double-digit price increases in the previous year. As many Chinese families took on big and risky loans to buy apartments, price drops could mean some owners will owe more than they can sell the homes for. “New restrictions in many cities make it harder to unload a property. To ease the pressure, the government is encouraging the growth of a rental market.”
While overall house prices have increased by 7.5 per cent from the previous year, price drops in smaller cities without large population demand will mean no one will buy these units even at a discounted rate. The World Bank has identified property price uncertainty as a major concern in China’s growth  in 2018. In Shanghai previous condo purchases in a development  protested at a developer’s office as unit prices were decreased by seven per cent from the amount paid a year before.
China’s property market accounts for a significant share of economic growth—as much as a third, according to Moody’s Investors Service—sending ripples outward into the global economy. The property boom stoked imports of housing materials, cars, appliances and other products. UBS called Chinese property one of the major engines of global growth in 2017.”  If the real estate bubble is bursting  in China, will there be any  impact in Metro Vancouver real estate?
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