a raft of headlines are weighing on already-frail confidence in the property market.
Evergrande said it has to revisit its debt restructuring plan and a unit missed a yuan bond payment. Former executives at the defaulted real estate giant have been detained
China Oceanwide Holdings Ltd. said it is facing liquidation and
Country Garden Holdings Co. is still trying to avoid a potential default.
Bloomberg 26 September 2023
China’s gigantic real estate bubble has popped, but prices still haven’t fallen much.
In part, that is because of price controls which many Chinese cities imposed on housing over the past two years to keep values stable. Now China is starting to loosen the rules—with unpredictable consequences.
Under the rules, which were applied in dozens of cities, local governments typically blocked developers of new homes from offering discounts of 10% to 15% or more on unsold properties.
In some cities, officials put a floor on sale prices for existing homes as well.
it may be time to ditch the policies
About 96% of urban households in China owned an apartment as of 2019, according to the country’s central bank. And for many, their home is their largest financial asset.
“The logical thing to do is to allow further decline in prices and let the market reach a new equilibrium,” said Yao Wei, chief China economist at Société Générale.
“But that’s a risky choice, and there is a great degree of uncertainty as to how things will play out.”
WSJ 27 September 2023