China’s housing market is a wreck, and a heady blend of regulatory capture and corporatism smirks at the devastation. The Chinese people, promised future homes after paying mortgages for years, are finding out there many never be a unit with their welcome mats before the door, as firms pull up stakes and abandon the projects.
Isabelle Qian and Agnes Chang of the New York Times report:
A woman paid for an apartment where she imagined her toddler would grow up safe, and she might have a second child. In Shanghai, a technician from a small town thought she had made her parents proud by buying a new home in the big city.
What these and hundreds of thousands of other Chinese homebuyers couldn’t have known was that the country’s decades-long real estate boom would come to a sudden halt. Developers ran out of money amid a government crackdown on excessive debt and a slowing economy. They stopped building.
. . .
Regulations require that the money from presales only be used for construction of that project. But until recently, supervision was lax and developers would use the funds for whatever they wanted, including starting other projects.
As home prices soared, the government tightened financing rules for developers in the hope of preventing a housing sector collapse. Many large developers — like China Fortune Land Development of the Royals Garden project in Shanghai — buckled under the weight of massive debt and had to stop work.
Despite the delay, Ms. Xu continues to fork out more than $1,300 every month in mortgage payments.
She said that she was hiding the problem from her parents. She is from a small town in southern China and owning property in Shanghai had been the ultimate proof that she had made it.
“I dodge their questions about the apartment, but how much longer can I keep doing that?”
More and more Chinese are deciding to boycott by refusing to pay their mortgages, a quiet and powerful rebuke to the CCP and its vision for the market there.
Daisuke Wakabayashi of the Times notes the scale of the problem:
The number of properties where collectives of homeowners have started or threatened to boycott has reached 326 nationwide, according to a crowdsourced list titled “WeNeedHome” on GitHub, an online repository. ANZ Research estimates that the boycotts could affect about $222 billion of home loans sitting on bank balance sheets, or roughly 4 percent of outstanding mortgages.
People will grant a regime almost endless grace so long as the individual’s desires are largely met. But when faced with the hopelessness that the loss of a longed-for home can bring, we can only hope that a change will be swift and for the better.