“Households can’t absorb the excess inventory”
“Low probability of triggering a widespread financial crisis”
According to a new analysis, China could take at least several years to solve its real estate problem that threatens its national economy.
On the 6th (local time), according to CNBC, a senior economist at Oxford Economics predicted in a report that “it will take at least 4 to 6 years for China to solve the problem in the real estate sector”.
Lu based his claim on key data such as real estate inventory and the sales-to-construction ratio.
He pointed out, “However, no matter how we analyze the data, without a meaningful recovery in demand, resolving the market’s oversupply will take at least another four years.”
He added, “If households start selling their spare homes due to fears of diminishing disposal profits from falling prices, this will become an additional obstacle. The inventory is too much for households to absorb quickly”.
However, he downplayed the possibility of the real estate issue spreading to other parts of China’s economy. Lu stated, “China’s housing market downturn will take a different path than the U.S., Spain, or Ireland did 10 to 15 years ago. The probability of triggering a more widespread financial crisis is small”.
By. Ko Dae Young
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