While housing prices in the US and elsewhere have steadily fallen since 2007, real estate in China is three times expensive now than it was three years ago. Although buyers are plentiful and new properties are being constructed around the clock, financial analysts believe the the housing bubble in China is soon to pop. The main reason that real estate experts believe that the housing boom in China is doomed is because there are not enough high wage earners available to purchase the multi-million dollar properties. While there are plenty of rich business men and foreign buyers coming to China, the average person makes little more than a few thousand dollars a year. With a huge backlog of penthouses, estates and other high prices real estate available, investors will have to stop building until some of the existing properties are purchased.
Standard & Poor recently re-evaluated China’s housing marked and downgraded its financial outlook from stable down to a negative rating. Developers are prepared to see a 10% price reduction on properties in China, but this may only be the beginning of a downward trend. While millions of Chinese residents continue to live in cramped quarters, only the chosen few are able to live in relative comfort. China’s housing market may not become as unstable as the real estate industry in the US overnight, but while other markets are already on the road to recovery, China may start to fail when others start to flourish again. Speculators expect to see a major change in the Chinese housing market within approximately one year.