Posted 4/2/2024, 9:30:18 PM
China's Cooling Housing Market Creates Economic Headwinds, But Financial Crisis Unlikely
- China does not have a housing oversupply problem despite some vacant properties; resale and investment data do not indicate oversupply
- However, there is an overcorrection happening with falling home sales, prices, and developer bankruptcies
- A financial crisis is unlikely though due to low mortgage risks, collateralized bank lending, and well-capitalized banks
- The property sector slowdown is negatively impacting GDP growth and delaying China's consumption-driven economic transition
- Cooling policies should be removed to allow the housing market to stabilize, restore confidence, spur consumption, and reaccelerate growth