China's real estate slump expected to last for years

Economists on Wall Street are warning that weakness in China’s property market could be a drag on the economy in the coming years. “We see persistent weakness in the property sector, particularly in lower-tier cities and private developer financing, and we believe there is no quick fix for these,” Goldman Sachs economists led by China economist Lisheng Wang wrote in a weekend note. The property market is expected to see an “L-shaped recovery,” Goldman’s economists said. This is defined as a slow rate of recovery after steep declines. “A downside risk is that China’s property sector fails to stabilize despite the easing we expect. In this scenario, confidence and financial conditions in China will tighten, which will have direct impacts on China’s growth but will also have negative repercussions on the region,” Morgan Stanley said in a report.