China’s real estate slump predicted to last for years

Weakness in China’s real estate sector could be a drag on the economy for years to come and could even impact countries in the wider region, Wall Street banks have warned.

Weakness in China’s real estate sector could be a drag on the economy for years to come and could even impact countries in the wider region, Wall Street banks have warned.

“We see persistent weaknesses in the property sector, mainly related to lower-tier cities and private developer financing, and believe there appears no quick fix for them,” Goldman Sachs economists led by China economist Lisheng Wang said in a weekend note.

Goldman’s economists said the property market is expected to see an “L-shaped recovery” — defined as steep declines followed by a slow recovery rate.

“We only assume an ‘L-shaped’ recovery in the property sector in coming years,” they said.