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Home sales in China’s real estate market fell sharply throughout July as underlying economic problems became more apparent.
July sales fell 39.7% from a year earlier, or about $77.6 billion, or 523.14 billion yuan. From June to July alone, it fell 28.6%, ending a two-month rally.
According to The Wall Street Journal, condo sales in May and June were up from previous months, but those gains were largely attenuated by July’s gains.
“The Chinese economy has been slowing for quite some time,” Craig Singleton, a researcher at the nonpartisan Foundation for Defense of Democracy, previously told Fox News Digital. “What we’re witnessing right now is a rapid economic slowdown.”
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Singleton believes that while COVID-19 played a role in the initial troubles, the slowdown in China’s recovery was caused by “deeper structural, systemic problems.”
“One of them just happens to be… according to some conservative estimates, China’s highly leveraged real estate market,” he explained. “China’s real estate sector accounts for 30% of China’s GDP, so even a small deviation in that market will have a broader impact on China. of global GDP and its wider growth.”
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China’s property market has seen a sales boom, fueled by debt-financed construction projects that sell homes before they’re built. The lack of completed projects has led to protests from angry would-be homebuyers who refuse to pay their mortgages.
As of July 29, hundreds of buyers from about 320 projects across the country had refused to pay their mortgages. These potential buyers turned to second-hand or newly-built state-owned homes, which could be cheaper.
Even lower interest rates and down payments or outright cash subsidies will not help spark enough activity to prop up a sluggish housing market. Local authorities have considered full relief payments for cash-strapped developers.
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“If the liquidity crunch of developers is not eased, the industry will not be able to stabilize,” said Song Hongwei, research director at Tongce Research Institute.