China’s real estate sector has been significantly impacted by the introduction of the three red lines policy, eventually leading to a liquidity crunch in the sector. The impact of the initial policy measures is considered to be short-lived, as the housing market downturn and developer risks could have been worse than what was expected earlier. However, more concrete measures will be needed for a substantial recovery in the sector.
China Real Estate: The Desperate Need of More Policy Measures
PolicyKey Takeways
- The untamed rise in housing prices over the years has resulted in unaffordable housing for the people
- The increasing thirst for capital by highly leveraged developers looking to cash in on the rising prices and strong demand created a bubble-like situation in the housing sector.
- The industry will witness a continued deterioration in the key real estate indicators when additional policy measures are introduced.
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