China should shield against the dangers of falling property prices and a potential crisis if home values drop below mortgages, a prominent state-linked economist warned, reports Bloomberg. Li Yang, chairman of the National Institution for Finance & Development, said that some Chinese cities have already set a floor for property prices as well as price caps, and the vacancy rate in some regions have topped 10%.
“If one day the value of houses plunged below the mortgage value, people won’t even be able to repay their debt by selling the houses, and that would be a real crisis for the property market,” Li said at a forum on Aug. 29.
China’s home ownership rate was 90% in 2020, far higher than the global average of 69%, which makes it difficult for cities to contain price increases and speculation in the market, according to Li. China needs to create an effective rental market, he added.
You must log in to post a comment.