Nomura Says Chinese Housing Bubble Has Burst

Economists at Nomura have made their call: China’s property bubble has burst, they say, and the country’s economy could slow dramatically unless Beijing steps in with new stimulus measures.

“It is no longer a question of ‘if’ but rather ‘how severe’ the property market correction will be,” three of the bank’s analysts say in a new report. “We are convinced that the property sector has passed a turning point.”

Analysts at the Japan-based broker are among the most critical of China’s property sector, which has powered ahead for years despite frequent warnings that a collapse is just round the corner.

Skeptics say the real estate sector is emblematic of problems such as rapid credit expansion and policies that promote short term growth over a more balanced economy. The building rush means property supply now outstrips demand in some parts of the country.

Bulls counter that the boom is sustainable, especially as hundreds of millions of Chinese migrate into urban areas.

The size of the sector — somewhere between 15% to 25% of the economy — underscores the importance of the debate for a world that is increasingly connected to China.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza