China's household debt has increased sharply in the face of rising property values, fuelling fears that a property downturn could impact the world's second largest economy. Buyers rushing to get on the property ladder have contributed to a boom in mortgage lending, which has caused household debt in the country to rise from over 40% of GDP to 28% in the past five years. However, ANZ analysts warn that a drop in property prices could result in loans going bad, in turn affecting interest rates and exchange rates and becoming a "global macro event".
China's household debt has increased sharply in the face of rising property values, fuelling fears that a property downturn could impact the world's second largest economy. Buyers rushing to get on the property ladder have contributed to a boom in mortgage lending, which has caused household debt in the country to rise from 28% of GDP to over 40% in the past five years. However, ANZ analysts warn that a drop in property prices could result in loans going bad, in turn affecting interest rates and exchange rates and becoming a "global macro event".