Home News ‘Ticking time bomb’—China’s real estate bust deepens as prices fall for 11th month

‘Ticking time bomb’—China’s real estate bust deepens as prices fall for 11th month

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For example, if you’re worried about prices dropping for beachfront properties in Florida, be grateful that it’s not in China.

Its property market, which has driven China’s rapid growth since the 2008 financial crisis, is now in the midst of a record 11 housing bankruptcies.th Monthly price drop.

China may be half the world away, but the problem will soon feel closer. If the real estate downturn spills over to other sectors, it could derail the dynamics that have driven the global economy and major US companies such as Tesla for more than a decade.

New home prices in 70 cities, excluding state-subsidized homes July fell slightly over 0.1% from Juneaccording to the National Bureau of Statistics of China.

By comparison, the S&P core logic The Case-Shiller US National Home Price Index is still 1% month-on-month increase in May, according to the latest available figures. Industry analysts warn that a correction is coming that will particularly affect overheated markets like Austin.

Yang Yuezhen, head of research at a Shanghai-based housing market think tank, told the state-run publication: global times on monday.

For years, China has preferred its citizens to invest in its four walls rather than the often volatile stock markets of Shanghai and tech hub Shenzhen. With consumers earning virtually no interest on bank deposits and their money subject to strict cross-border capital controls, people have little place to put their growing savings outside the housing market.

$90 billion wiped out

As a result of the credit-induced boom, goldman sachs In 2019, the country’s residential real estate market was famously estimated to be valued at $52 trillion. double the size As a counterpart in the United States.

But ahead of President Xi Jinping’s unprecedented reelection to a third term in the fall, cracks are rapidly forming. Evergrande, the world’s most indebted company and China’s largest property developer, defaulted last yearrivals Kaisa Group, Country Garden, Sunac China and Shimao Group are also in various predicaments.

In addition, many Chinese investors mortgage boycottrejecting installments for properties that may never be built.

According to Bloomberg, the sector will at least $90 billion wiped out stocks and bonds Since the year began as a result of the crisis.

To make matters worse, President Xi Jinping has not deviated from his COVID zero policy and is imposing strict lockdowns, preventing the economy from returning to its previous boom.Most recently, the tropical attractions of Sanya, a kind of Chinese Hawaii, Effects of the outbreakaffects trips to popular resorts.

In a move to ease the situation, the country’s central bank Cut two major interest rates In a surprise move on Monday. Whether that will help stimulate demand going forward is another question.

Sunday, Hong Kong Daily south china morning postowned by Chinese e-commerce giant Alibaba, warned. 50 million vacant apartments Called a “time bomb”, it could flood the market.

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