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.



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

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