China’s stock market has recorded losses of more than $3.2 trillion over the past few weeks. This figure is greater than the economies of India, Britain, Russia, and several other major world economies. Still speculating how this and the impending bubble burst will affect India and the rest of the world?
The collapse of the Chinese property market
The Chinese real estate market is a $1.30 trillion behemoth. According to China’s largest real estate developer, China Vanke, the ‘golden era’ in its housing market is over. If there’s one thing every analyst agrees on, it’s that China’s economic meltdown could create a domino effect on the world economy – causing a major global economic meltdown.
According to the trustee, a global recession is imminent, and China’s downfall will play a big role in it. What will have a bad impact on the global economy is that the previous economic recession has not yet ended. The world is still recovering from it.
There had been strong assumptions over the last 5 years about the Chinese real estate market entering a recession, but it was delayed due to government action. According to a recent report in financial times, China’s property downturn actually came at an even worse time – when there was a weaker global real estate market.
US market
China’s meltdown is likely to impact the high-end housing market and activity in the US. In particular, hot real estate destinations in the country, such as Miami will be negatively affected. It should be noted that cities like Miami have over 80% of their buyers from overseas and they have a supply of real estate that is more than 10 years old.
Australian market
The impact of China’s slowdown on the Australian economy and housing area the market will be big and make sense. In fact, the Australian economy could lose around 1% of the overall GDP growth rate.
Impact on the Indian market
The impact on the Indian real estate market is seen as positive as far as new property development is concerned. Consumers will feel the fall in the price of aluminum, copper and other construction materials that are beneficial to them. While Chinese companies will use aggressive sales tactics to clear their inventories, Indian and real estate consumers real estate agent in noida and other major cities are likely to benefit.
Realty India in particular is experiencing a shift as consumers are now allowed to buy properties online. Tata Housing for example has embraced internet technology and integrated its application in the real estate market by enabling online buying and financing.
Impact on China itself
Overall, it appears that China’s economic crisis is something the country can weather. But it is the population and global markets that will bear the brunt. The slump in China’s real estate market has put a big question mark on its leadership and economic strategy.
The country has long been ridiculed for pursuing unrealistically fast growth rates. Growth in reality is often pegged to bridges leading nowhere and grand cities with no people living in them! The effects of the crisis that has already started will create an inefficient housing market and diminishing consumption.
Conclusion
China has long driven its economy based on a government-backed credit system backed by low interest rates. Whenever a downturn became apparent, the government injected more money into its banks and expanded the existing credit system. The time has come when the largest credit bubble in history has reached unprecedented sizes, and no further effort by the government can prevent it from bursting. This is also a good time for real estate investors and consumers in India to explore their options, as prices tend to move in their favor.
