Just like it was in Japan after the bubble burst in 1989? If we look at the Chinese real estate market and falling housing prices, and at the similarly falling prices of Chinese stocks, we can say that something is probably going on.
According to the latest data for June, housing prices in China continue to decline. In the case of newly built residential buildings, prices fell in June by an average of 0.67% MoM (in the 70 largest cities).
In the case of apartments on the secondary market, prices fell in June by 0.85% MoM (in the 70 largest cities).
From the market top in 2021, price drops are already 6.94% (primary market), and on the secondary market by 12.8%. Similarly, according to quarterly BIS data, apartment prices have already fallen by 9.9% (until Q1 2024). See Figure 1.
After the real estate bubble burst in 1991 in Japan, housing prices fell for 18 years and dropped overall to a trough in Q2 2009 by 46.5% (BIS data). Chart 2 shows housing prices in Japan since 1955, including housing prices in China (2021 market peak in China = 1991 market peak in Japan).
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