A prominent Chinese property developer has issued a stern warning the party may be over for China’s inflated real estate market.
Pan Shiyi, the billionaire owner of commercial developer SOHO China, delivered his warning last week as house prices across the vast country doubled in the past decade.
“I think Chinese property is the Titanic about to crash in to the iceberg in front of it,” he said.
House prices in 100 major Chinese cities posted their first monthly decline in almost two years in May, adding to concerns the bubble may be about to burst.
Surging house prices have put homes beyond many first-time buyers, prompting the People’s Bank of China – the central bank – to ask lenders to give first-time buyers priority.
Oversupply has also contributed to China’s problems, with the International Monetary Fund announcing last week that much of the industrial northeast had too many houses being built.
Property contributes 20 per cent to China’s GDP and a bust would send shockwaves through the world’s second largest economy.
“Definitely a real estate bubble bursting in China is bad news,” Joerg Wuttke, president of the European Chamber of Commerce in China warned.
However this may be good news for other real estate markets investors pull out of China and look to invest elsewhere.