The enduring conviction among Chinese home buyers that real estate represented an infallible investment had propelled the country’s property sector to serve as the backbone of its economy. However, in the past two years, as companies crumbled under the burden of substantial debts and new home sales plummeted, Chinese consumers have demonstrated an equally steadfast belief: Real estate has transformed into a diminishing investment.
This notable erosion of confidence in property, a primary store of wealth for numerous Chinese families, presents a mounting challenge for Chinese policymakers who are employing various measures to rejuvenate the ailing industry, with limited success. The challenges facing the country’s real estate sector were starkly revealed on Monday when a Hong Kong court mandated the winding up and liquidation of China Evergrande, burdened with over $300 billion in debt.
