It was reported in China that the Chinese’s property prices fell for the 10th consecutive month highlighting the country’s spiraling real estate crisis and how the government’s efforts to revive the markets are failing.
The China’s National bureau of Statistics reported that new home sales fell from a year earlier in 70 cities. There is uncertainty and anxiety in the financial system amid reports that increasing number of homebuyers are refusing to pay mortgages for unfinished apartments. The Chinese real estate market is valued at over $2.4 trillion dollars and there are signs that is could cause the property bubble to crash without any signs of recovery. Due to sinking property bonds and declining bank shares, investors are alarmed and some have already declared bankruptcy.
Because of the impact of the COVID-19 restrictions, residential sales have dropped 23% in June which is better than the drop seen in May this year of 42%. The positive signs are gradually disappearing from this market as more and more people boycott their mortgages and COVID cases also can flare-up anytime. This is the longest slump seen in China which is continuing for more than 12 months straight since the private property market was created in the later 1990’s.
Chinese government authorities are holding emergency meetings with bank officials to get the complete picture of the mortgage boycott and the financial liabilities faced by the banks. It is reported that buyers of at least 100 residential projects in more than 50 cities are not paying mortgages due to construction delays and concerns about the property market crashing.