In June, average new home prices fell 0.5% year-on-year, after falling 0.1% a month earlier, according to the data website.
The problem is deeply rooted. Non-payment would impact the country’s banking sector as non-performing assets will accumulate further. The shadow banking sector, which includes trust companies and is an important source of funding for Chinese developers, will also be affected,
Although Beijing has started to fight the fires to stabilize the situation by asking banks to facilitate loans to property developers, homebuyer confidence is at an all-time low. The authorities are even considering developing a program to facilitate the freezing of mortgage payments for buyers who have not received the apartments.
“There is a real crisis situation in China and the authorities are aware of it. They are taking all the necessary measures to remedy it. But we will have to wait and watch to understand how things evolve in the months to come,” said a a person involved in the education sector in China said
The crumbling of real estate behemoths
Total debt level stood at around $5.2 trillion in June 2021, according to the financial services firm
Homebuyer protests have become commonplace. Earlier this month, thousands of homebuyers announced on social media that they would not be paying off their mortgages. Protests escalated and spread to 100 cities across the country.
But amid overambitious development plans, exorbitant debt and a toughening regulatory environment aimed at deleveraging the industry, many have failed to do so. “That left some households making mortgage payments for several years before they could move in,” he said.
Will it be China
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