Why China’s Property Crisis is Still Getting Worse
Economic Development Housing VideoSummary
China has some of the most expensive housing in the world, a consequence of the rapid urbanization in the ‘80s and ‘90s that exponentially increased housing demand. Yet recently, China’s National Bureau of Statistics released home price data that displayed a 0.7% decrease between April and May in new home prices in urban areas, as well as a 1% decrease in second-hand homes. These numbers have been the steepest decline in prices since 2014 and 2011, respectively, even though weeks before the data was released, Beijing announced a major housing support package. Despite the CCP’s (Communist Party of China) attempts to deflate the housing bubble, such as relaxing mortgage rules and providing cheaper mortgages, households are not purchasing homes due to debt from past mortgages. The video speculates that China’s housing crisis will exacerbate trade frictions, as the country exports more goods than it imports, resulting in a larger trade surplus and escalating trade wars.