China Housing Bubble
How could the Chinese housing bubble affect the Australian economy negatively?
The Chinese economy is one of the fastest growing economies in history and they have excelled by throwing tons of resources into modernizing their economy. Real estate is a foundation of China’s phenomenal growth record in the past two decades with property construction alone accounting for 13% of GDP in 2010. The health of the economy is crucial to China’s construction, steel and cement sectors. Chinese growth has a positive effect on the Australia economy whom we are China’s biggest provider in raw materials of iron ore and minerals, so when the Australian economy booms, then Australia cashes in. However, the fundamental concern is that the Chinese economy is facing a housing bubble, which could detrimentally affect their economy as well as ours.
For decades, China’s economy has been rapidly growing with the help of the construction and real estate markets. The government has often directed the cash into massive infrastructure projects or favored industries in order to keep the economy booming. However, China’s economy has hit a brick wall and is slowing down fast.
With more than 20 construction projects beginning each year, developers and investors have been sinking their hard earned generations of cash into the Chinese market to help fund these projects, this saw a huge increase in the demand for these newly developed properties. With the Government implementing a one-property per family in the major cities and allowing for families to buy their own homes, this saw the demand of properties sky rocket with medium-income earners looking to set up a healthy nest egg for their future generations. With the property market on the rapid incline, the Chinese saw this as the perfect opportunity to make a profitable margin, as the property market has been able to provide substantial returns than a bank deposit would. This made unprecedented history and demand for the Chinese real
The Chinese economy is one of the fastest growing economies in history and they have excelled by throwing tons of resources into modernizing their economy. Real estate is a foundation of China’s phenomenal growth record in the past two decades with property construction alone accounting for 13% of GDP in 2010. The health of the economy is crucial to China’s construction, steel and cement sectors. Chinese growth has a positive effect on the Australia economy whom we are China’s biggest provider in raw materials of iron ore and minerals, so when the Australian economy booms, then Australia cashes in. However, the fundamental concern is that the Chinese economy is facing a housing bubble, which could detrimentally affect their economy as well as ours.
For decades, China’s economy has been rapidly growing with the help of the construction and real estate markets. The government has often directed the cash into massive infrastructure projects or favored industries in order to keep the economy booming. However, China’s economy has hit a brick wall and is slowing down fast.
With more than 20 construction projects beginning each year, developers and investors have been sinking their hard earned generations of cash into the Chinese market to help fund these projects, this saw a huge increase in the demand for these newly developed properties. With the Government implementing a one-property per family in the major cities and allowing for families to buy their own homes, this saw the demand of properties sky rocket with medium-income earners looking to set up a healthy nest egg for their future generations. With the property market on the rapid incline, the Chinese saw this as the perfect opportunity to make a profitable margin, as the property market has been able to provide substantial returns than a bank deposit would. This made unprecedented history and demand for the Chinese real