As a result, in 2020 and 2021, some cities in China tightened home purchase restrictions to cool off the housing market. At the same time, the government instructed banks to tighten lending criteria to highly leveraged developers. The combination of these measures led to liquidity issues for some high-risk developers, who have defaulted on their debt. In the past 12 months, we have seen prices tilt lower (see figure 1).
The slowdown in the Chinese real estate market has put pressure on China’s GDP growth. Here are some answers to crucial questions about the risks related to the Chinese property market.
What caused the property slowdown? Between 2010 and 2020, China saw a strong property market, with property prices in the top 70 cities rising by 60%, leading some home buyers to complain about property affordability. The government became concerned that this could lead to a property bubble.
