China’s property market isn’t looking too well. Earlier today, we learned prices in June fell in 55 of 70 major cities.
One of the simple problems is that supply exceeds demand.
“With a substantial chunk of demand driven by speculators, falling prices threaten an exodus of buyers. Even holding cash in a bank deposit now offers better returns than real estate,” writes Tom Orlik, economist at Bloomberg.
But some state media are “moving shamelessly into line behind supporting demand,” writes Orlik who points out the headline from state newspaper Changzhou Daily that reads “Now is a good time to buy property.”
The article explains that home prices have fallen but the decline has been pretty small and that there’s a lot of demand for good housing at low prices. It points out that Jiangsu has been ranked fifth in the country for real estate, behind Shanghai, Nanjing, Suzhou and Hangzhou. Changzhou it argues is the third best for real estate within Jiangsu province.*
Meanwhile, economists warn that the worst of China’s property downturn isn’t behind us yet.
*Translation: Stephanie Yang