![]() ![]() Chicago Mercantile: Certain market data is the property of Chicago Mercantile Exchange Inc. US market indices are shown in real time, except for the S&P 500 which is refreshed every two minutes. Your CNN account Log in to your CNN account “If not, all the owners who have not paid off their loans will stop repaying the mortgage,” the letter read, adding that any loss should be borne by banks, local governments, and the developer. “The Evergrande Longting project in Jingdezhen must fully resume work before October 20, 2022,” they wrote in an open letter on June 30, published on the internet and widely circulated by media. The real estate sector accounts for as much as 30% of China’s GDP.Īccording to the Tianmu report, buyers of an Evergrande project in Jingdezhen, Jiangxi province, fired “the first shot” in the current repayment protest. The developer still has many property projects across the country that are not finished yet, according to company filings. The trouble in China’s real estate sector began in 2020, when Beijing started cracking down on easy credit for property firms, which has resulted in a cash crunch for many major developers.Įvergrande, the country’s most indebted real state firm, was labeled a defaulter last fall and is undergoing debt restructuring. Property sales have also slumped, as buyers back away from the market amid rising uncertainty about their jobs and income. New home prices in 70 cities fell for a ninth straight month in May, according to recent data from the National Bureau of Statistics. Weibo/EyePress/ReutersĬhina tries to stem growing anger over frozen bank deposits Over 3,000 Chinese demonstrators hold banners during a rare mass protest over the freezing of deposits by rural-based banks, outside a People\'s Bank of China building in Zhengzhou, Henan province, China July 10, 2022. Nomura analysts estimate that developers delivered only around 60% of homes they pre-sold between 20, while China’s outstanding mortgage loans rose by 26.3 trillion yuan ($3.9 trillion) in the same period.Įxperts say trouble has been brewing for a while, and it could lead to financial and social unrest. “The number is still growing,” the Tianmu report said, citing statistics it had obtained from some buyers. One media report estimated 46,000 homebuyers were involved at just 14 of those projects. ![]() These projects are scattered across central, southern and eastern China. Tianmu News, a state-owned digital media outlet, said Thursday that buyers of homes at 100 unfinished projects or more had jointly announced they would stop paying their mortgages. Bloomberg reported that Chinese authorities were holding emergency talks with banks.Īccording to multiple state media reports and data compiled by Shanghai-based research firm China Real Estate Information Corporation (CRIC), buyers across 18 provinces and 47 cities have stopped making payments since the end of June. (ACGBF), said Thursday that they believed the risks were manageable, adding that they were monitoring the situation closely. “Presales are the most common way of selling homes in China, so the stakes there are high,” Nomura analysts said in a research report on Thursday.Īt least seven major lenders, including Industrial and Commercial Bank of China Home prices are also falling, meaning buyers may be locked into a property that is now worth less than they agreed to pay.Īnalysts fear that a payment strike among homebuyers could lead to further defaults by developers, placing additional strain on China’s banks at a time when the world’s second largest economy is struggling to recover from a sharp Covid-related slowdown. ![]() The payment boycott comes as a growing number of projects have been delayed or stalled by a cash crunch that saw giant developer Evergrande default on its debt last year and several other companies seek protection from creditors. These funds are used to finance construction by the developers. In China, real estate firms are allowed to sell homes before completing them, and customers have to start repaying mortgages before they are in possession of the new property. China’s real estate crisis is escalating, raising concerns about growing risks in the banking system.ĭesperate homebuyers across dozens of cities are refusing to pay mortgages on unfinished homes, according to state media reports and economists at international banks. ![]()
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