China’s property market cools

China’s property market cools
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A property debt crisis and a sluggish economy in China have touched off a plunge in new home sales and depressed real estate prices for the first time in years — jeopardizing an important investment for millions of Chinese families.

The situation grew worse when a new variant of the coronavirus triggered widespread lockdowns and brought the economy to a standstill. Prices have dropped across the country, but demand has not returned, a frightening sign for an economy that had come to depend on housing for job growth and business spending.

But so far, China’s efforts to revive the housing market with lower mortgage rates, easier credit, subsidies and relaxed regulations have not worked. In April and May, new home prices fell in more than half of China’s 70 biggest cities for the first time since 2016, and sales of such properties tumbled nearly 60 percent.

Macro: Since the country started to roll out reforms in 1988 for commercial housing, property has become a pillar of an ascendant economy. By some estimates, it accounts for about 30 percent of China’s gross domestic product.

Micro: For young people who want to marry, owning a home is considered a must before starting a family. Instead of investing in stocks and bonds, Chinese households allocate most of their savings to real estate — at more than twice the rate of Americans.

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