China's Economic Slowdown Will Hit London's Property Market Hard
With Chinese inflation and purchasing power continuing to drag, the worry has now turned to the effect this will have on the future of global markets. When the GFC occurred in 2008, China authorised its banks to lend the funds needed in order to maintain their double digit growth. It is because of this that between 2009 and 2014 that the size of the Chinese banking system grew more than that of the US system.
So why will the UK be effected? It is predicted that the sharp slowdown in Chinese growth will affect the global economy as a whole and in turn this will trickle down to the UK. The UK is one of the largest European destinations for outward investment, so the affect is inevitable.
Whilst this hit is anticipated by the banks, stores and hotels have been preparing for the boost of Chinese visitors. In London we have seen the Chinese banks and finance firms expand strongly, which has caused the government to want to build upon role of London in the internationalisation. It is also reported that Chinese investors play a large role in the purchasing of London property. Yet if Chinese banks experience the worsening of their problem loans, this might prevent them from purchasing and expanding in London. Already trying to cope with the recent changes in stamp duty, this may just be another blow the property sector does not need.
There is no guarantee that the London will be directly hit by the domino effect of the Chinese economy, but we must be prepared as anything can happen.