China's home prices crash as buyers refuse to pay mortgage
In June the average prices of new homes declined by 0.5 per cent year-on-year, following a 0.1 per cent drop a month earlier, data website
The problem is deep rooted. The non payment would impact the country's banking industry as the non-performing assets will pile up further. The shadow banking sector, which includes trust companies and is an important funding source for Chinese developers, will be hurt as well,
Though Beijing has started firefighting to stabilise the situation by asking banks to ease lending for property developers, confidence among home buyers is at its lowest. The authorities are even looking at carving out a scheme facilitating a freeze of mortgage payment by homebuyers who have not been handed over the apartments.
"There is a real crisis-like situation in China and the authorities are aware of this. They are taking all measures required to address this. But we will have to wait and watch to understand how things take shape in the coming months," a person engaged with the education sector in China told
The crumbling of real estate behemoths
The total debt level stood at about $5.2 trillion as of June 2021, according to financial services company
Protests by home buyers have become rampant. Earlier this month thousands of home buyers announced on social media they would not pay their mortgage loans. The protests have intensified spreading across 100 cities in the country.
But amid overly ambitious development plans, sky-high debt, and a tightening regulatory environment aimed at deleveraging the industry, many have failed to do so. "This has left some households making mortgage payments for several years before being able to move in," it said.
Will this be China's
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