China’s Long Property Slump Was Always Expected, Economists Say
There is an old saying that history does not repeat itself, but it often rhymes. In most areas of life, that may be true, but when it comes to real estate and the stock market, history behaves in a much more predictable way. Patterns of boom and bust appear again and again because human nature remains the same. Greed drives markets upward, fear sends them crashing down, and the belief that “this time is different” often proves to be one of the most dangerous ideas in investing. China’s prolonged property downturn is following a familiar global pattern, even if many hoped the country would escape the usual consequences.
A painful slump, yet not a surprising one
Millions of Chinese homeowners, investors, and developers have been hurt by the long slide in the property sector. Prices have stagnated or fallen, construction has slowed, and confidence in the market has been shaken. Because real estate plays such an important role in China’s economy, every small shift is closely watched. Any hint of recovery becomes a source of optimism for people who have been waiting for better news. Yet for economists and historians who study market cycles, China’s slump is not unexpected. Once a property bubble becomes large and deeply linked to the broader economy, a prolonged correction is more likely than a quick rebound.
A contrarian voice sparks brief excitement
Last year, a rare burst of optimism came from John Lam, the head of China property research at UBS Group AG. Lam is known for taking contrarian positions, and when he argued that the Chinese property market could be turning a corner, some investors welcomed his bold prediction. For many people who had endured months of negative headlines and falling prices, his outlook felt like a much needed ray of hope. Lam’s reputation gave his comments additional weight because he had been right before about major developments in the sector.
A track record built on early warnings
Lam’s credibility comes from one of the most significant calls in recent property market history. In early 2021, long before China Evergrande Group collapsed under the pressure of massive debts, he downgraded the company. At the time, Evergrande was widely described as the world’s most indebted property developer. Many analysts questioned whether it could sustain its ambitious expansion strategy. Lam’s early warning, almost a full year before the company’s default, proved accurate and boosted his standing among market observers. Because of that, when he later expressed optimism about China’s overall property market, people listened.
Why the downturn was inevitable
Even with Lam’s reputation, the broader context remains clear. China’s property market had expanded at a rapid pace for years. Developers borrowed heavily, local governments relied on land sales for income and many families invested most of their savings into real estate. As prices rose, expectations rose with them. This cycle was unsustainable. Once regulators tightened borrowing rules and demand slowed, the correction began. Just like in other countries, an overheated market eventually required a long period of adjustment. History shows that when property bubbles burst, the damage is usually deep and long lasting.
The human impact behind the economic narrative
Behind the charts and forecasts are millions of people struggling with uncertainty. Homebuyers wait for stalled projects to resume, young families worry about making mortgage payments and developers work to complete obligations with limited cash flow. Confidence has been weakened not only by declining prices but also by repeated delays and broken promises from troubled firms. These human stories mirror those seen in other global property crises, reminding us that real estate downturns affect more than just markets. They influence daily life, long term planning and public trust.
What the future may look like
Economists believe that China’s property sector will eventually stabilize but not quickly. A more balanced and sustainable housing market may emerge once excess supply is reduced and financial risks are better managed. The government has already introduced measures to support reasonable housing demand and help developers adjust. However, meaningful recovery may take years rather than months. Investors are being reminded that cycles do not reset overnight and that the road back to stability is often long.
A lesson repeated across generations
The extended slump reinforces a timeless lesson in finance. Real estate bubbles can grow for years, creating the illusion that risk has disappeared, but when they burst the consequences are severe. China is now working through this cycle just as other major economies have in the past. Understanding that this pattern is part of a larger historical rhythm helps explain why the downturn feels painful yet predictable. The hope now is that the lessons learned will support a more resilient and stable housing market in the years ahead.
