(Source: WSJ) - China’s once buoyant property market is facing some rough sailing. In fact, according to one tycoon – Soho China Ltd0410.HK -0.63%’s chief Pan Shiyi — the real estate market is looking more like the Titanic headed in the direction of an iceberg.
Mr. Pan, the co-founder and chairman of Soho China Ltd., is taking a very bearish view on the housing market, which has struggled this year. In the first four months of the year, home sales were down 9.9% from the same period a year ago in value terms, official data shows. New construction starts — as calculated by area — were down almost 25% year over year in the same period.
As if that’s not bad enough, demand is also weakening in an expanding number of cities as banks tighten mortgage lending and sales are dampened by widespread expectations of price cuts.
“I think China’s property market is like the Titanic and it will soon hit an iceberg in front of it,” Mr. Pan told a financial forum on Friday, according to the China Business News.
“After hitting the iceberg, the risks will not only be in the real estate sector. The bigger risk will be in the financial sector,” he added.
He said serious problems lie with financial products like trust and wealth management products, as well as entrusted loans that charge higher interest rates than banks and are key financing vehicles for the property sector.