An Assesment On China´s Property Market Risks


The “three red lines” policy to force developers to cut debt has been a catalyst for the property downturn since 2021. The root cause is the incentive problems that distorted the 1998-2003 housing reform, leading to a buildup of speculative excess for over two decades. • The Chinese characteristics in the system make a property market crash (or “Minsky moment”) unlikely. However, the property market’s predicament is structural. Its size and economic importance will shrink in the long-term, and this will drag on GDP growth in the medium-term.

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