Chinese market slowing down

The housing market in China’s largest cities has shown signs of slowing down over the past few months. The first half of the year saw a rebound in housing prices which gave a timely boost to the economy at a time when exports were looking weaker than usual. However, Chinese analysts are now saying that the rebound looks to have reached its peak and prices are rising at a much reduced pace.

Worries about a housing bubble are being taken seriously by the national government, as evidenced by a flurry of stories on this subject being featured on Chinese state media. In addition to this, local governments have been tightening restrictions on home buying in an effort to curb excessive price rises. If there was a significant housing bubble in China, and were it to pop and damage the world’s second largest economy, that would have severe repercussions for both China and the rest of the world.

Price rises are still considerable compared to a year ago. The average rise in China’s 70 major cities was 7.9% in July and 7.3% in June compared to the previous year. Prices in Beijing and Shanghai both saw rises of well over 20% in July compared to the previous year but, again, only a small rise over June.

What is clear is that the situation is not catastrophic by any measure, and very far away from a crash. It looks from the outside like more of a natural correction than anything more drastic, but the situation bears further monitoring in the future. As mentioned previously, the Chinese economy is so large and holds so much influence over world affairs that its general health is very much everyone’s concern whether we live in the Far East or not.