Drop in property demand could affect steel and copper prices

Decline in house prices in China is sparking fear that the property market might enter a period of prolonged decline causing substantial harm to the economy and affect global commodity prices.

China Vanke, the country’s biggest developer by market share, said that it is already seeing declining sales, especially in major cities.

Shirley Xiao, executive vice-president of China Vauke, told the Financial Times: “Prices have begun to decline little by little so we think even buyers who are able to buy will choose to wait because they’re targeting even lower price cuts.”

Property accounts for a fifth of the fixed investment in China and collapse in the industry could have serious effects for the rest of the economy affecting global steel and copper prices.

The Financial Times reports that economists estimate a 30% drop in property prices would precipitate a collapsed in the fixed investment economy, which has seen annual growth above 9%. They said that this was likely in the next few years.