Fears China property bubble could cost banks $800 billion

  • China watchers are starting to put a price tag on what any collapse in the nation’s red-hot property market could cost banks.

A drop of 30 per cent in housing prices could cause 4 per cent of total bank loans worth 4.1 trillion yuan ($800 billion) to sour, according to DBS Vickers Hong Kong Ltd. Commerzbank AG said such a drop could trigger 4 trillion yuan in delinquencies. Pacific Investment Management Co. expects the non-performing loan ratio to peak at 6 per cent in the next few years from the current 1.75 per cent, amid risks from the property sector.

READ MORE VIA DOMAIN.COM.AU

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When land costs more than finished homes, you’re in dangerous territory, says Deutsche.Photo: Getty Images

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