Global Data Pod Research Rap: China’s economic challenges and policy dilemma
Global Data Pod
Navigating the Real Estate Dilemma: Balance vs. Adjustment
The ongoing adjustment in the housing market reveals critical inconsistencies between price stability and volume drops. Policymakers in China strategically aim to control asset prices to prevent a balance sheet recession, learning from Japan's past. The home price decline remains minimal at only 10%, contrasting sharply with a staggering 50 to 70% drop in transaction volume. Despite government efforts to stabilize the market through relaxed policies, the impact has been limited due to persistent expectations of further price reductions and weak income forecasts. This creates a dilemma: rapid price adjustments could improve affordability for new buyers but would adversely affect existing homeowners, who have significant wealth tied to property values. Thus, while the market may overshoot in volume reductions, stabilization remains elusive in the near term.
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