cross-posted from: lemmy.sdf.org/post/46924955
After little to no progress ending a downturn that dates back to at least 2021, the industry’s woes have only intensified. A slump in home prices has deepened, and Vanke — once the nation’s biggest developer — plunged in credit and stock markets after proposing delays paying bondholders.
The significance of China’s real estate market to the average person cannot be overstated. Besides contributing around one-fifth of gross domestic product at its peak, homebuying has long been seen as a safe investment for households.
No more. And the loss of wealth from falling property prices goes a long way toward explaining why consumption has failed to become the key driver of economic growth that officials have envisaged.
One big reason that the property market’s woes seem to be worsening is [property developer] Vanke. Even though the government stepped in this year to help the developer plug funding gaps, authorities have gone quiet as pressure over liquidity and bond redemption mounts. Then there’s the abrupt changes in Vanke’s senior management.
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The stakes are high for the government. Bailing out Vanke could send the wrong message given the number of firms in a similar predicament. It’d also be hard to justify after Evergrande, another formerly mighty developer, collapsed under the weight of debt and unfinished projects.
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Another reason for growing real estate angst is the Chinese government ordering a halt to vital data. Beijing has done something similar in the past, to the detriment of investors trying to understand the economy. In summer 2023 authorities stopped providing youth unemployment figures after they hit a record high. When they resumed releases in early 2024 with what they said was new methodology, the numbers were much rosier.
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The missing housing data “could increase uncertainty about the struggling sector’s condition,” Kristy Hung, a senior real estate analyst at Bloomberg Intelligence, wrote in a note. “The November data would likely show steeper declines.”
Speaking of China’s playbook when the news is real bad, we’re also seeing some censorship. Authorities in Shanghai are wiping away social media posts that express pessimism about the property market. Social media platforms Xiaohongshu and Bilibili removed more than 40,000 posts as part of what the Shanghai government called a “special campaign” to regulate online real estate content. Read more about the censoring here.
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The problem is that while China isn’t running out of ideas, it seems short of money. Cash-strapped local governments can no longer depend on land sales to fund themselves.
Authorities are going after tax dodgers and people with overseas investment income, along with imposing new value-added taxes on contraceptives.
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