The real estate market has had the heaviest impact on Chinese household wealth this year. The housing crisis has affected the entire Chinese economy, with 70% of household wealth tied up in real estate.
According to Bloomberg estimates, if housing prices in China fall by 5%, total household assets in the country will "evaporate" 19,000 billion yuan (about 65.5 million billion VND).
Eric Zhu, an economist at Bloomberg Economics , said this may just be the beginning, and that Chinese household wealth will likely continue to decline in the coming years.
Unless the market recovers strongly, Chinese consumers’ real estate wealth is unlikely to increase, the expert said. According to UBS, the average net worth of each adult in China fell 2.2% in 2022.
Chinese household wealth is likely to continue to decline over the next few years (Photo: Reit).
Even high-net-worth individuals in China are becoming more cautious, according to a survey by China Merchants Bank and consulting firm Bain & Co. Individuals' financial goals are shifting from "creating wealth" to "protecting wealth."
Official Beijing data shows existing home prices have fallen only slightly. However, reports from real estate agents and private data providers show prices in prime areas in major cities have fallen by at least 15%.
Bloomberg Economics estimates that China’s real estate sector’s share of gross domestic product (GDP) will fall to about 16% by 2026 from about 20% now. The decline will put about 5 million people, or 1% of China’s urban workforce, at risk of unemployment or reduced income.
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