“Property market weakness is now spreading into the overall economy.”
If you’re wondering about the future value of your home or the housing market in general, you may want to pay attention to what’s going on in China.
The bottom line: The way we see it at Elliott Wave International, contagion may not be out of the question.
More than two years ago, we called attention to major red flags for the Chinese real estate market.
For example, our August 2021 Global Market Perspective noted that Chinese home prices were still climbing in many sectors, but major losses were suddenly occurring in many formerly sizzling neighborhoods.
By Aug. 25, the China Morning Post said:
China’s home prices are falling in districts where the most prestigious schools are located.
The Morning Post mentioned a case in point: A home sold for 42% less than a similar home in the same neighborhood just three months earlier.
So, it wasn’t surprising that in September 2021, housing prices in China had hit a peak.
Fast forward to our October 2023 Global Market Perspective, which provides an update:
This chart shows [that in] September 2021… the China Real Residential Property Price Index completed a five wave rise from the mid-2000s. Back then, the dominant view in China was that property prices always go up…
Last month, [GMP] discussed some of the many ways in which property market weakness is now spreading into the overall economy.
Yet, economists have been somewhat dismissive of this threat.
Indeed, here’s a Sept. 25 Business Insider headline:
China’s Economic Situation Isn’t as Dire as It Seems
More than that, as our October Global Market Perspective also notes:
U.S. economists naturally continue to insist that American exposure to China’s weakening property prices is a non-issue.
It may not be wise to hang your hat on this sentiment expressed by U.S. economists.
There are already signs that “contagion” may be in the works.
For example, our recent Global Market Perspective shows a chart of the housing market for a northeastern U.S. state which is highly revealing — call it a major warning sign.
See it for yourself — plus, get our analysis of 50-plus global financial markets in the just-published November Global Market Perspective (you can also access the October issue) as you follow the link below.
Here’s the “Four-Letter” Word in the Investment World:
In his book Prechter’s Perspective, Robert Prechter elaborates:
Hope is a four-letter word in the world of investment. Only a cold reading of the pertinent factors can keep you on track for more time than you’re off. [emphasis added]
Know that our just-published November Global Market Perspective provides subscribers with that “cold reading” of global stock indexes, bonds, metals, energy, forex, cryptocurrencies and much more.
Learn what Elliott wave analysis suggests is next for 50-plus global financial markets by following the link below.