China’s Domino Effect

China’s Domino Effect

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China’s property market has taken a steep turn for the worse if we are to believe the various reports that are beginning to surface in major online publications right now.

The signs of trouble are not a total shock to the system of any alert investor, as many would have been aware of the implications when China started to ban major development projects at the beginning of this year due to heavy pollution in the city of Beijing. This ban didn’t happen overnight though, it was advertised in due time to give developers ample time to prepare themselves for the change.

However, this ban has caused a huge shift in building frenzy as many developers prepared for the future by building extra. This has created a massive oversupply of mainly inner city apartments and now that the Olympic Games have been and gone, the market has slowed down.

But this isn’t the only reason, the global credit crunch is affecting Chinese developers who can’t afford to hold on to their empty properties until better times happen to come around so they are forced to slash property prices by up to 30%.

While this is a serious problem for many developers and Realtors across the country, investors with plenty of cash rub their hands in glee as they can buy a considerable savings indeed.

But it isn’t just the Beijing market that suffers, the Hangzhou and Shenzhen provinces also suffer increasing lack of trading volume and massive property price slashes.

While the major problem lies in the general housing market, meaning mid range, these issues are also starting to affect the luxury property market in China.

Right now, the full scale of the possible effects are not known yet and some say that the fourth quarter will bring more detailed information as to whether the economy in China will suffer even worse or not.