Once real estate cannot be saved, its serious consequences cannot be ignored. The real estate sector is the backbone of many national economies, and its collapse will bring a series of problems and may lead to the risk of economic collapse.
First, a collapse in the real estate sector will generate serious unemployment. The industry involves many related sectors such as construction, renovation, sales, etc., and once the real estate market collapses, these areas will face a large number of layoffs, leading to rising unemployment. High unemployment will further weaken people's spending power, which in turn will affect other industries.
Second, a collapse in the real estate market will trigger a chain reaction that will have a serious impact on the financial system. Banks and other financial institutions typically lend large amounts to property developers and home buyers, and these institutions face a huge risk of default in the event of a property crash. Turmoil in the financial system can lead to a credit crunch, making it difficult for companies to access financial support, which in turn can bring down the entire economic system.
In addition, the collapse of the real estate market will also create balance sheet problems. Many people invest their wealth in real estate, and they risk losing their wealth once house prices plummet. The collapse of the real estate market will lead to an increase in banks' non-performing loans, a large imbalance in the balance sheet, and a serious risk of asset loss for banks.
In addition, the weakness of the real estate market will lead to the stagnation of real estate projects and the limitation of the development of the construction industry. This will lead to the weakening of the spillover effect of the real estate market, such as building materials, furniture and other related industries. This has led to a reduction in domestic economic activity, a decline in gross domestic product (GDP), and a slowdown in economic growth.
However, this is not to say that once the real estate collapses, there will be a complete collapse of the economy. National governments can take a range of measures to mitigate the crisis, such as implementing fiscal stimulus policies and reducing interest rates. However, these measures will take time to work and may place a burden on national finances.
Overall, a collapse in the real estate market will have serious consequences, including unemployment, financial system risks, balance sheet risks, and reduced economic activity. While a single collapse may not lead to a complete collapse, strong measures are needed to avoid a vicious circle and protect the continued development of the economy.