Chinese Housing Market Collapses Further Due to Crisis at Evergrande

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The Chinese housing market also suffered greatly in September from the country’s real estate sector crisis. Real estate group Evergrande’s payment problems have spread to other developers, raising concerns among buyers in the country.

 

Last month, the total sales price was almost 17 percent lower than a year earlier, Bloomberg news agency has calculated based on figures from the Chinese statistics agency. In August, the decline was also almost a fifth.

“Nobody buys a house anymore because they’re starting to get scared,” said a Bank of America economist who specializes in China.

There are now fears of a vicious circle, in which people are buying fewer and fewer houses, and payment problems with real estate developers are increasing. As a result, investors would have to sell their real estate at much lower prices. This is seen as a problematic situation for a country such as China, in which many people have their money in the real estate sector.

Sounds intended to be reassuring came from China’s central bank over the weekend. Governor Yi Gang stated that defaults due to “mismanagement” by some companies pose a challenge to the Chinese economy. Still, authorities will be careful not to endanger the entire financial system.

On Friday, another executive of the People’s Bank of China said the problems at real estate developer Evergrande are isolated and manageable. Other real estate companies in the country are stable.

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