Lower Housing Prices Gives Consumers Reason to Relax
October 25, 2015

CKGSB Professor of Economics Li Wei has commented on the latest economic figures from China in an article by leading Canadian daily The Globe and Mail. Recently released GDP figures show a dip below 7 percent growth, as China’s slowdown continues. Partly attributed to cooling investment fervor among ordinary Chinese citizens, the GDP growth rate of 6.9 percent between July and September 2015 is a cause for concern for the government. Although China is likely to avoid an abrupt fall-off in growth, more measures to boost economic momentum are to be expected.

Focusing on how this slowdown has affected housing prices, Canada’s influential Globe and Mail reported on October 19 that the “weakness in housing has seen prices fall in numerous cities and devastated the manufacturers and developers whose heavy spending once drove the economy.”

Leading researcher for the CKGSB Business Confidence Index, a monthly survey of entrepreneurs, Prof. Li told the Globe and Mail that lower housing prices have given consumers freedom to “be more relaxed.” He explained that regular Chinese people would be thinking, “Why save up for a down payment when the price of housing will not rise as quickly as inflation?”

Questioned further by the Globe and Mail, Li said, “Chinese have made so many sacrifices in order to enjoy future consumption. And I think it’s time for them to realize that future.” So while major purchases may not be top of the agenda for the average Chinese consumer this year, other sectors may see benefits coming their way from a less investment-driven economy.

To read the original Globe & Mail article in full, please click here.

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