A close mainland relative cried her eyes out while video-calling with my wife and me recently. Like many in China who have bought property since the late 2010s, she is sitting on a big loss with her flat outside downtown Chongqing.

The city saw sales pick up around the time of the Spring Festival, traditionally an off-season. But when she tried her luck, the offers from potential buyers were brutal, and she called off the sale.

Knowing that I work for an English-language newspaper in Hong Kong and may have access to market intelligence – I don’t – she asked for my opinion. What do I know about real-life investment?

But I did not want to disappoint her. So I quoted an analysis by UBS Group AG, which predicts a rebound soon, and one by Bloomberg, which argues for a medium-term recovery starting next year. I did not have the heart to show her a new paper co-written by Kenneth Rogoff, a prominent Harvard economist and former official of the International Monetary Fund (IMF) and the US Federal Reserve Board, which compares China’s real estate slump with Japan’s “lost decade”.

“A Tale of Two Countries: The Real Estate Crises in 1990s Japan and Contemporary China” is published by the Brookings Institution. In it, Rogoff and IMF economist Yuanchen Yang argue that China’s property downturn, now into its sixth year, “appears to be in the middle stages of a multi-year correction”.

The property market “has exerted such substantial contractionary effects” on the broader economy. The authors point out that real estate – which is linked to sectors such as building materials, furniture and utilities – and infrastructure cover almost one-third of economic demand in China. Moreover, mainland households allocate nearly 70 per cent of their wealth to housing, far more than major economies such as Japan and the United States.