The end may be neigh for China’s inflated property market, according to one analyst who says the nation’s banking system is unlikely to pump out enough credit this year to sustain further gains in real-estate prices.
China’s banks issued upwards of 11 trillion yuan in new lending in 2010, via declared and off-balance sheet transactions, Tulloch estimates. That figure is about 15% more than the 9.6 trillion yuan in new credit issued in 2009 as part of emergency spending measures to help shield the Chinese economy from the global crisis.
Sustaining further gains in real-estate prices this year will require another round of double-digit credit growth.
Property prices across mainland China have continued their upward march, even as supply overhang reach dangerous proportions. As evidence, Tulloch, points to surveys — which he acknowledges are unscientific but says are still useful — that indicate nationwide residential vacancy rates could be as high as 50%, while in Beijing it could be as high as 60%.
Edit: boy, what year is it again?