Home prices have skyrocketed 325 per cent in the past two decades. OP Capital’s chief executive Oscar Choi said he’s “100 per cent sure” there’s a bubble in the housing market.
Meanwhile, overbuilding has emerged as a concern.
Local governments’ reliance on land sales for revenue has led to ghost cities – fully built but unoccupied. The excess supply of housing has given developers cause for pause, which in turns puts a squeeze on local government finance, as they face fiscal shortfalls because they cannot find developers to buy their land.
Property is the biggest risk in China in the next 12 months, much greater than the US-China trade war, Macquarie’s Greater China economics head Larry Hu said in August.
While he and other analysts expect Beijing will crank up its intervention in the property market to prevent any catastrophic slide in prices, there are no guarantees on results.
Looking ahead, big developers are shifting their business models to protect their empires. Evergrande, Wanda and Country Garden are now diversifying into health care, robotics and green energy.