Home News China’s Once-Sizzling Property Market Has Started to Cool

China’s Once-Sizzling Property Market Has Started to Cool

by admin
0 comment

A year ago, the business of Liang Jiawei, a real estate salesperson in Zhanjiang, a coastal city in southern China, was booming.

He was able to sell three apartments a day without twisting his arm. Mr. Liang admitted that the apartments were fairly common, but the new complex in an up-and-coming district not far from the high-speed rail station was enough to attract buyers.

Then there was a sudden reversal of fate.China real estate sector Began to crumble under The weight of that huge debt..What was already becoming the country’s worst housing market in a few years when a new variant of the coronavirus was triggered was hit another. Extensive blockade And it stagnated the economy.

The turmoil has caused a plunge in new home sales and a fall in real estate prices for the first time in years, jeopardizing and risking the already fragile economic outlook that has made employment growth and business spending dependent on homes. An important investment for millions of Chinese families.

So far, China’s efforts to lower mortgage rates, facilitate credit, subsidize, relax regulations and revive the housing market have failed. New home prices fell in April and May More than half of China’s 70 big cities For the first time since 2016, sales of such properties plummeted by nearly 60%.

Zhanjiang, a port city with 7 million people, There was the sharpest price drop in any major city. Liang said he sold only five apartments in April. May got worse.

“Prices have fallen, but the enthusiasm for buying a home hasn’t returned yet,” Liang said. “The economy is not good and the continued impact of the pandemic has completely changed the situation.”

As China slowly breaks out of the restrictive blockade, the country is focusing on preventing economic slowdowns. Last month, its prime minister, Li Keqiang, called for an emergency meeting. Issued a serious warning More than 100,000 officials say that businesses and local governments need to act with “clear urgency.”

The real estate sector is a big and important tool. Real estate has been a pillar of the ascendant economy since China began reforming commercial housing in 1988.According to some estimates, it explains About 30 percent of China’s GDP After considering related industries such as construction and real estate management.

Property also has profound implications in Chinese society. For young people who want to get married, owning a home is considered essential before starting a family. Instead of investing in stocks and bonds, Chinese households allocate most of their savings to real estate. This is more than twice as high as Americans.

The impact on real estate prices can also spread to the economy as a whole by eroding the amount of money Chinese shoppers are willing to spend on home appliances, clothing, jewelery, or cars.

Beijing is trying to get people to buy real estate again as the economy is at stake.

government Pause trial program Property tax will be implemented in March.Bank of China last month Reduce mortgage costs It was the largest amount since the introduction of the new interest rate system in 2019.

In addition, various local governments are developing dozens of new policies to encourage home purchases. Meishan City, Sichuan Province, said it would provide subsidies for new home purchases by the end of the year. The Zhejiang city of Wenzhou said it would allow mortgage interest-only repayments for the first three years for first-time home buyers. Huainan, a city in Anhui, has ordered banks to raise more money, shorten loan approval periods, and lower mortgage rates and down payment requirements for first-time buyers.

For some potential homebuyers, incentives are not enough to offset the risk.

Cao Jingyu, who works for an outdoor furniture company in Shenzhen, said lower down payments mean more payments to banks over time. She said she didn’t want to tie up most of her money at her home, given the fragile state of the economy and the constant potential for dismissal.

Earlier this year she almost bought an apartment in the north of Shenzhen. She hesitated when she realized that only 20 percent of the units were sold after she made a deposit in the house under construction. At the last minute she withdrew.

“I’m worried that the risk of buying a house is high,” said Cao, 30,.

A year ago, concerns about China’s real estate market were enthusiastic speculators, not passive buyers. 288 units in the building when the property in Shenzhen became available in March 2020 Sold out online in 7 minutesAccording to the state media.

Chinese officials are concerned about the housing bubble and its impact on the financial system, so-called 3 red lines A policy to curb the reckless borrowing habits of the country’s largest real estate developer.

New rules that require companies to repay their debt before borrowing more money have begun to reveal cracks in the real estate market. In late 2021, the China Evergrande Group, a very debt-rich real estate developer, Bond payment defaults To the creditor. Since Evergrande, more than 12 companies have defaulted.

In the debt problem, Chinese authorities urged developers to prioritize the finishing of buildings they had already sold. However, in a hurry by a company that is short of cash to complete the project, a new set of problems arose: protests against crude work.

When Evergrande began to face liquidity issues, an estimated 1.6 million people were waiting to complete the homes the developers had already purchased.

A 27-year-old car salesperson, he bought Evergrande real estate in 2019 in the hope that it will be completed in 2021. It was postponed until June.

He said he didn’t think the latest deadline was realistic. There is no electricity in the apartment yet. The elevator is not complete and no flooring is installed.

And he is already aware of the problem. The window leaks. The outdoor space is only wide lanes and there are no sidewalks for residents. There are no bushes or trees, just bare grass patches.

When Evergrande scheduled the building ceremony, residents protested and the event was cancelled. The developer told the residents that he had no more money.

“We are told not to be too demanding. There are still many people who couldn’t complete the apartment,” he said.

Evergrande did not respond to the email requesting comment and the phone number listed on the website was disconnected.

People across the country are protesting quality issues and unfulfilled promises.

In 2019, Louis Lee, the 38-year-old manager of a real estate company, purchased an apartment in the “Moon on the Sea” complex by Vanke, one of the country’s largest real estate developers. She was told that the complex in Guangzhou would eventually include a shopping mall with a grocery store and an international school. This is a big selling point for Lee, who has two young children.

However, more than a year after she moved, the school building and mall remain empty. Residents told them that Vanke had not enough corporate interest to fill the mall, and that the school application was tied to the government bureaucracy.

The local district challenged this version of the event. In recent years, Vanke has told residents that he has not paid the rent for the land because of a financial dispute with the village that owned the land. After the issue was brought to court, Vanke finally paid, but there are currently no plans for an international school.

In April, a furious homeowner put up a banner covering the top 10 floors of a skyscraper.False advertisement of Vanke, “Based on photos of the inhabitants. Other banners warned people that buying a Vanke home would “ruin their lives.” When police arrived to tell the homeowner to remove the flag, the protesters refused and clashed with the officer. Vanke did not respond to the email asking for comment.

Lee regrets having purchased the property. She says that the financial problems facing developers lead to quality problems.

“I personally don’t recommend buying an apartment now,” Lee said. “People should really think about it.”

Claire Fu contributed to the report and research.

You may also like