In early 2023, the Chinese real estate market had a short-lived rebound as local governments across the country issued policies to bail out the failing real estate sector, according to the China Index Academy, a real estate research institute.
Two real estate developers in Kunshan, China were penalized by Chinese regulators for cutting prices by a large margin, so much so, according to regulators, that they "Disrupted the normal order of the real estate market and caused social instability."
According to estimates from prominent economist Ren Zeping's "China Housing Market Value Report 2021," the country's housing market value was $62.6 trillion in 2020, compared to $33.6 trillion in the United States, $10.8 trillion in Japan, and $31.5 trillion in the United Kingdom, France, and Germany combined.
According to Ren's "China Wealth Report 2022," the market value of China's housing market reached 476 trillion yuan in 2021.
The result is tightened financing for real estate companies, Fang warned: "The banks' tightening of finance to the real estate sector will further plunge them into chaos, thus causing a vicious cycle that will affect the banks' asset quality and profitability. If the risk spreads to a certain extent, banks will incur a large number of bad debts, leading to bankruptcy."
Amid China's housing market downturn, many real estate developers are in turmoil.
Even Wanda Group, one of China's oldest and largest real estate giants, is rumored to be at risk for a debt meltdown.
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