China Housing Bubble

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Week 2 Hand-in Assignment OUTLINE Thesis statement: The soaring property prices in China’s coastline and major cities such as Beijing, Shanghai, Shenzhen, and Dalian has formed the biggest bubbles in the real estate market in the decade. However, we do not see any slowdown in these cities. As of today, the property prices seem to keep on growing forever. Will China’s housing bubble pop? Compare the housing bubbles in the United States with that in China * A brief background information about the housing market in US before it crashed down * Elaborate on China’s current housing market and see how close is it to the housing market condition in the US Different views on China’s housing bubble * Optimists think that even…show more content…
2014). They argue that China’s economy is a whole different picture than the US. First of all, they point out that the US housing crash damaged most of the Americans’ life, but such case is very impossible to happen in China because China saves far more than any other countries in the world. Secondly, the Chinese government’s debt is much lower compared to the United State; hence the government is more capable when it comes to helping its banks in case of the assumed 20% of loans gone bad. Third, China’s policymakers will take necessary strategies to ensure the overall impact on the economy is not as strong as we have experienced in the crash down of the US economy, once the correction of the price is foreseen. Some of the economists even debate that China’s government will not allow the pop. As shown by the statistics, about 90% of the population own at least one home, where 65% of people’s investments are in the property market. If the bubble were set to pop, the Chinese government will not be able to afford the consequences of the social unrest (The Bloomberg, 2014). So Xi will use all the necessary means to avoid the housing market from crashing down. One of the attempts is to implement a charge of 20% property tax on the sale of the second home; and the other is to require a 70% of down payment in the case of buying a second home. Not quite of a surprise though, before the new policies come to effect, the real
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