Housing bubble 20216/28/2023 In the longer run, China is expected to continue its efforts to better regulate the sector to stabilize housing prices and market expectations. These included restrictions on housing purchases in 20 and limits on prices and consumer loans in 2016. In addition to affordability concerns, the government was mindful of potential property bubbles and associated financial risks and had since initiated several rounds of regulatory measures to stabilize housing prices. In 2010, the average housing price-to-income ratio of 50 major Chinese cities reached 12.5, higher than that of 23 out of 25 global cities included in a 2022 UBS survey of large cities, including New York City, London and Tokyo. More significantly, local government finances rely heavily on a thriving local real estate sector.Ĭhina’s real estate sector has developed rapidly since the late 1990s, despite the ups and downs in housing prices. The sector exerts a wider impact on the economy through its linkages to multiple participants in the housing sector, including homebuyers, developers, financial institutions, suppliers of construction materials, contractors and various service providers. While the government’s estimation placed the sector’s contribution to China’s GDP at 13-14% in 2022, some economists believed the contribution to be at 17-29%. The real estate sector has been a key driver for China’s growth since the country launched its market-oriented housing reforms in 1998. Two questions are important: First, can the government’s policy effort revitalize China’s real estate sector without triggering another round of price hikes? Second, what is the implication on China’s post-COVID economic recovery and its long-term growth? A Policy-Induced Crisis Housing prices have since been on the decline, and investment plunged to a historical low in 2022.Ī depressed housing sector poses grave concerns to China’s overall economic outcome and local government finances, and, since early 2022, the government has taken measures to salvage the sector. CNN Sans ™ & © 2016 Cable News Network.In late 2021, when China’s real estate sector had already stagnated for months, the government dealt another serious blow to the sector, imposing restrictions on both developers’ and homebuyers’ finances. Market holidays and trading hours provided by Copp Clark Limited. All content of the Dow Jones branded indices Copyright S&P Dow Jones Indices LLC and/or its affiliates. ![]() Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Chicago Mercantile: Certain market data is the property of Chicago Mercantile Exchange Inc. US market indices are shown in real time, except for the S&P 500 which is refreshed every two minutes. Your CNN account Log in to your CNN account “It’s too soon to call whether it is or not.” ![]() “This has to be monitored very closely,” Citigroup Morgan Stanley CEO James Gorman said while housing is not in a bubble nationally, some markets “look very frothy.” (GS) CEO David Solomon said he doesn’t see a bubble, though he urged the Federal Reserve to “get the right balance” in policy to keep booming asset prices in check. We have enough capital to withstand multiple crises,” he said. Dimon was the only big bank CEO to outright say there is a bubble, but he stressed the financial system is better positioned this time because banks have stocked up on loss-absorbing capital. His comments came in response to a question from Senator Jon Tester asking if there is a housing bubble. (Photo by Saul Loeb/AFP/Getty Images) Saul Loeb/AFP/Getty Images ![]() The US real estate market is booming even as the coronavirus crisis intensifies, and the seemingly insatiable appetite for new and older homes has sent prices soaring - meaning more and more families with modest incomes are seeing their dreams of owning property shattered. A house's real estate for sale sign is seen in front of a home in Arlington, Virginia, November 19, 2020.
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