How the World’s Most Expensive Real Estate Is Coming Down
The real estate market is being pushed to its limit by the Chinese slowdown, a new study by the International Monetary Fund (IMF) says.
The report, published today, says China’s slowdown is causing “significant disruptions” to the real estate industry, particularly in the region of southern China.
“The slowing of China’s economy is the most significant challenge facing the world’s most expensive real estate,” said David Gartrell, the IMF’s chief economist.
“This has implications for China’s future economic growth, including for its future trade relationships with the US and Europe.”
The IMF says China has reduced investment by $1.4 trillion in the last year, making it the world leader in real estate.
China’s real estate sector has seen a rapid decline in sales since the early 2000s.
The latest figures from the China Association of Real Estate Boards show that China’s market is “at a critical juncture”, the IMF said.
China is already seeing a slowing economy and it has had to reduce its spending, which is reducing the demand for real estate in the country, the report says.
“It is now difficult to understand how China’s economic growth could continue to accelerate in the future,” it said.
The IMF estimates that in 2020, China will need to reduce the number of new housing units it builds by 20 per cent to keep pace with growth.
The real value of China real estate is expected to decline by $30 billion to $1 trillion.
The country is currently in the middle of a massive economic slowdown.
It has been struggling to cope with a housing shortage that has seen China’s population shrink by about three million since 2012.