“China has said its property prices fell 1.3% in September, marking the first year-on-year fall in the sector.”
This business news is about current China’s economic situation. China is now facing a decreasing property price trend which affects its economic growth greatly. Property sector is the main drag on China’s economic growth, which accounts for 15% of China’s economy, and it plays an important role in China’s GDP growth. The current home price in China is still dropping and it is the fifth consecutive month that the property price drops. Economist Shane Oliver from AMP Capital in Sydney predicted that the home price will continue falling in next year in China. And he said that he was not surprised that Chinese property market would continue to deteriorate. I agree with what he said that the property downturn will be the biggest threat to China’s economy.
Personally speaking, as a Chinese, this situation is not what I want to see. Poor people who used to be unable to purchase a house have ability to buy a house now due to the falling property price. This group of people might think that the falling property price can change their life. Is it really a good thing that all Chinese want to see?
From the national point of view, falling on property price is not a good thing and it can bring many negative impacts on Chinese citizens as well as the whole country. First of all, as I just mentioned, it will bring negative impacts on China’s economy. Also, as housing price drops, China’s GDP would slow dramatically and down to 4% annual grow from 7.7% last year. Second, as the property price drops, China’s economy is in a slowest growing pace. The decreasing property price can influence a lot of people, such as developers. China’s property developers are facing a sluggish property sale, and the banks are very cautious to lend money to home buyers as well.
Because of the falling property price, China’s economy will face a challenge and it might lead to the weakest economic performance in 24 years. Based on this situation, the Chinese government is now introducing more stimulus measures to help China to restore its economic growth.
Reference:
See more information about the relationship between housing price and economy here: http://www.oecd.org/eco/outlook/2086136.pdf
“China’s economic growth slows to more than five year low.” BBC News. Web. 21 October 2014
http://www.bbc.com/news/business-29700067
“China’s property prices fall in September.” BBC News. Web. 24 October 2014.
http://www.bbc.com/news/business-29751849