What is happening to the real estate market in China?.. An American newspaper answers

The New York Times revealed that the real estate market is a main pillar in China, almost two years after the largest real estate developer in China defaulted in 2021, and attention turned to another major player in this market.

The newspaper said that the real estate market in China slowed significantly in the first six months of the year, as the country witnessed new defaults, reflecting the crisis of the real estate sector, which is suffering mainly from the consequences of the outbreak of the coronavirus due to lockdown restrictions and the slowdown of the economy.
 
The report stressed that the real estate market is the backbone of the Chinese economy, and the main source of investment for many Chinese families, so any problem experienced by the sector affects the entire society and possibly the world.
 
The New York Times explains that over the past three decades, as China’s population has risen and its residents have flocked to cities in search of economic opportunities, a boom in the real estate market has created millions of jobs and savings for families, and today, this sector accounts for almost more than a quarter of total economic activity.
 
Since the debt crisis of the sector unfolded in mid-2021, this has led to the presence of many unfinished houses, non-payment of dues to creditors, who are not only financial institutions, but also ordinary people.
 
The crisis occurred after years of excessive borrowing and a construction boom, regulators allowed developers to borrow without limits for decades, and then the government suddenly intervened in 2020 to restrict the access of the largest real estate companies to funds, which led to a lack of liquidity for these companies.
 
The real estate industry accounted for 13% of total production, and directly employed 11% of workers, according to Euromonitor International, citing official data.
 
The data show that real estate investment in China fell by 8.5% during the period from January to July 2023, while new construction decreased by almost 25%.
 
Demand for the purchase of real estate has declined, as PBOC data shows that the volume of loans issued to households, consisting mostly of mortgages, decreased by RMB 200 billion in July 2023.
 
The decline in consumer spending was partly due to the fall in housing prices, which affected their savings, mostly related to Real Estate.