In China, homebuyers who went all in say they want out

property new
A visitor in the sales office for Evergrande Mansions in Dongguan, China on September 28, 2021. China Evergrande Group’s financial troubles, and the government policies that helped push it to the brink of collapse, have threatened an important economic driver: home sales. (Photo: New York Times)
China is trying to cool its costly and dangerously debt-ridden housing market, where high prices and go-go levels of borrowing and spending are increasingly seen as a national threat.اضافة اعلان

But as the troubles of a major property developer and its $300 billion mountain of debt drive a government effort to contain the peril, Beijing risks hurting a major driver of its crucial economic growth engine: homebuyers like He Qiang.
He was so optimistic about property in China that he bought an apartment from that property developer, China Evergrande Group, then became a real estate agent himself, selling the company’s apartments to hundreds of other families.

“It was the peak of Evergrande’s glory,” He said.

He is much more pessimistic these days. He, who is from the southern city of Yueyang, has yet to move into his apartment because Evergrande has stopped construction. So many other people are nervous about buying homes, he said, that he’s considering going back to selling cars.

“People aren’t in the mood to buy property anymore,” He said.
The real estate boom that once attracted young professionals like He is experiencing a dramatic overhaul. At one point, buying was so frenzied that properties would sell out within minutes of being offered. Speculation sent prices soaring. Real estate grew to provide more than a quarter of the country’s economic growth by some estimates, with homes becoming the main savings vehicle for Chinese families.

Nearly three-quarters of household wealth in China is now tied to property. The loss of confidence in the market could spill over to lower sales of cars and appliances, further hurting the economy. Already, weak retail sales in China have signaled that consumers are feeling increasingly insecure. As more buyers shy away from home sales, experts say Beijing’s decision to intervene in the market and curb debt may risk overall growth.

“We are indeed seeing a very serious slowdown in the property market, with falling prices, sales, and construction activity, and this is likely to drag down economic growth in the next couple of quarters,” said Arthur Kroeber, managing director of Gavekal Dragonomics, an independent economic research firm.

Evergrande was once a paragon of China’s real estate boom. More recently, though, it has shaken global markets with news of a possible collapse. The company’s troubles have elicited recent comments from central bankers around the world and even the US secretary of state, who urged China to “act responsibly” in handling Evergrande’s future.

He Qiang said his friends and neighbors who were once interested in buying real estate now tell him they worry about putting a down payment on an apartment that might never be built. Families once lured by Evergrande’s slick sales offices and impressive marketing are staying away.

“People worry, ‘If I buy now, what if the developer has a sale later?’” He said.
He doesn’t blame them.

Evergrande stopped the work on his own apartment in June. Construction at three of its other sprawling projects in his city have either stopped or are expected to stop because builders said they have not been paid. The dramatic headlines focused on property in China are likely to keep homebuyers away for longer than just a month or two.

Online government forums designed to receive feedback from local citizens are now inundated with complaints from angry families who bought apartments from Evergrande. Some wondered if they should keep paying the mortgage on a property that hasn’t been completed. One used the forum to ask if his lifelong savings would simply be “thrown into the water” if Evergrande were to go bankrupt.

A group of homebuyers on a forum in Guangzhou said they learned that Evergrande had placed the money from their down payments in a private bank account and not the one stipulated by the local authority and monitored closely. Another homebuyer in the city of Meishan in China’s Sichuan province used the forum to plead with officials, “Please uphold justice for your people!”
Local governments in cities as far and wide as Shiyan, Shenyang and Chongqing set up special task forces to help manage the potential fallout.

One official in the southern city of Shifang, responding to complaints on a government forum, said the local construction regulator, the police, and other government bodies met and informed the developers and contractors of “the grim consequences” they faced because of delayed construction.

The regulators who engineered the property slowdown have started to make moves to bolster the sector if things get worse. China’s central bank last month issued a rare comment saying it would monitor the real estate market. While a reckoning in the financial markets is unlikely, the central bank has also opened emergency spigots to make it easier for local banks to draw more money, just in case.

He Qiang is still waiting to hear from Evergrande about his apartment. Although the developer has not sent him a notice of delay, he can see that construction on his building stopped several months ago, and has had to reconsider his plans to get married in May.

The apartment was supposed to be finished by the end of the year, giving him time to decorate so that the space could feature prominently in the wedding festivities.

Read more Property