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China’s housing market saw a sharp decline in home sales throughout July as underlying economic turmoil became more apparent.
Sales fell 39.7% in July from the same period last year, marking a drop of around $77.6 billion – or 523.14 billion yuan. From June to July alone, a 28.6% decline ended a two-month recovery.
Apartment sales had increased in May and June from previous months, but July largely blunted those gains, according to the Wall Street Journal.
“China’s economy has been slowing down for some time,” Craig Singleton, a fellow with the nonpartisan Foundation for Defense of Democracies, previously told Fox News Digital. “What we’re seeing right now is a rapid economic downturn.”
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Singleton argues that while COVID-19 played a role in the initial unrest, China’s slowing recovery resulted from “deeper structural and systemic issues.”
“One of them happens to be… China’s hyper-leveraged real estate market by some conservative estimates,” he said. “China’s real estate sector accounts for 30% of China’s GDP, so even small deviations in this market can have an outsized impact on China’s broader global domestic product and broader growth.”
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China’s property market has seen a sales boom driven by debt-financed construction projects that sold homes before they were built. The lack of completed projects prompted protests from angry potential buyers who refused to pay their mortgages.
Hundreds of buyers from around 320 projects across the country as of July 29 have refused to pay their mortgages. These potential buyers have instead turned to buying second-hand homes or newly built state-owned homes, which may cost less.
Even cutting interest rates and down payments or outright offering cash grants have not helped generate enough activity to sustain the declining housing market. Local authorities have considered offering full relief funds to cash-strapped developers.
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“The industry will not stabilize unless the shortage of developer cash is relieved,” said Song Hongwei, research director of the Tongce Research Institute.