The Uneven Impact on Households
Edited by Ray Forrest and Ngai-Ming Yip
14. The impact of the financial crisis on China’s housing market Jianping Ye and Chao Sun INTRODUCTION Unlike that in most Western countries, China’s real estate market has a relatively short history. It was established in 1994 when the process of housing reform got under way and has gradually developed since then. Although the second-hand housing market in China has now attained a considerable scale, it is newly constructed housing that constitutes the greatest portion of the market. In parallel, although China’s finance and real-estate sectors are increasingly interdependent, this is still in its initial state of development. On the one hand, the housing market is supported mainly from bank credit than from other sources. On the other hand, bank credit is too concentrated in real estate. For instance, in 2008 more than one-third of the total credit of the bank of China was in real estate. The sub-prime mortgage crisis that originated in the USA after August 2007 evolved into a global financial tsunami, and inflicted enormous damage upon the world economy. With global economic integration, China’s economy could not be totally immune from these developments. From the macroeconomic data of the second half of 2008, it is evident that the financial crisis had some impact upon China’s economy, with a slowdown of China’s economic growth and a sharp decrease of import–export volume. As regards the real-estate industry, meanwhile, China’s housing prices declined, real-estate investment decreased, newly constructed housing (calculated by floor area) shrank and housing trading volumes...
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