China's property meltdown is battering middle-class wealth

Net worth per adult in China slid 2.2% to $75,731 in 2022, while total assets per adult fell for the first time since 2000

Stock investments: down 30%. Salary package: down property: 30%. Investment down 20%. As Thomas Zhou reflects on 2023, his household finances are front of mind.

"It's just heart-breaking," the 40-year-old financial worker from Shanghai said. "The only thing that still keeps me going is the thought of keeping my job so I can support my big family."

Zhou's predicament will resonate with many people in China, where slumps in the real estate and stock markets are wiping away household wealth. And as the world's second-largest economy struggles to regain momentum after years of Covid-19 lockdowns, there's also the growing threat of unemployment.

Now, middle-class households are being forced to rethink their money priorities, with some pulling away from investing, or selling assets to free up liquidity.

At the heart of the decline in family wealth is China's real estate meltdown, which is having a pervasive effect on a society where 70% of family assets are tied up in property. Every 5% decline in home prices will wipe out 19 trillion yuan ($2.7 trillion) in housing wealth, according to Bloomberg Economics.

"It might just be the beginning of more wealth losses in coming years," said Eric Zhu, an economist with Bloomberg Economics. "Unless there's a big bull market, small gains in financial wealth are unlikely to offset losses in housing wealth."