Credit Suisse: ‘Long-Term Pain’ for Chinese Property Market

From Forbes:

China’s overheated real-estate market has become a source of fascination and dread for investors. With a significant share of the economy tied up in construction, and global commodity prices hanging on Chinese demand, the recent drop in property prices could prove a turning point. China Vanke, the largest developer and a bellwether for the industry, said Monday that sales in November fell down 36%, year-on-year. This marks the company’s fourth consecutive month of double-digit drops in revenues. So how much further might house prices fall, and what would be the impact on developers’ balance sheets? Is it time to push the panic button? In a new report, Credit Suisse predicts an average drop of 20% from a peak in mid-2011 to the end of 2012.

If a 20% fall sounds dire, consider that some Chinese media outlets have begun speculating on the possibility of a much more severe correction to what is widely seen as a bubble. Some reports flout the idea of 40-50% slump, which would have huge implications for China’s political economy.

http://www.forbes.com/sites/simonmontlake/2011/12/06/long-term-pain-for-chinese-property-market-says-credit-suisse/