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The The housing market in China Home sales recorded a sharp drop-off throughout July as the underlying economic problems made themselves more apparent.
Sales fell 39.7% in July compared to the same period last year, marking a roughly $77.6 billion – or 523.14 billion yuan – decline. It fell 28.6% from June to July alone, ending a two-month rally.
Apartment sales are up July largely blunted those gains, according to The Wall Street Journal, in May and June.
“China’s economy has been slowing for quite some time,” Craig Singleton, a fellow at the nonpartisan Foundation for Defense of Democracies, previously told Fox News Digital. “What we’re seeing now is a rapid economic downturn.”
Singleton argues that while COVID-19 may have played a role in the initial problem, China’s recovery is slow resulted in “deep structural, systemic problems”.
“One of them could be … China’s hyper-leveraged property market by some conservative estimates,” he said. “China’s property sector makes up 30% of China’s GDP, so even small deviations in that market can impact China’s larger global domestic product and its broader growth.”
The Chinese real estate market Saw a sales boom driven by debt-financed building projects that sold homes before they were built. The lack of completed projects led to protests by angry homebuyers who refused to pay off their mortgages.
As of July 29, hundreds of buyers in nearly 320 projects across the country have refused to pay their mortgages. Those potential buyers have turned to buying second-hand homes or newly built state-owned homes, which can come at a cheaper cost.
Even lowering interest rates and down payments or providing outright cash subsidies did not spur enough activity to support the stagnant housing market. Local authorities have considered offering a full relief fund for cash-strapped developers.
“The sector will not stabilize unless the developers’ liquidity crisis is resolved,” said Song Hongwei, research director of the Tongche Research Institute.