5 Years On, China’s Property Crisis Has No End in Sight

 

5 Years On, China’s Property Crisis Has No End in Sight

 

The government had set out to slow speculation, kicking off a slowdown in real estate values that is still grinding on with wide economic consequences.

 

By Daisuke Wakabayashi and Joy Dong

Daisuke Wakabayashi, who covers Asia business and economics, is based in Seoul. Joy Dong reported from Hong Kong.

https://www.nytimes.com/2025/08/25/business/china-property-downturn.html

Aug. 25, 2025

 

When China Evergrande, once the biggest Chinese property developer, went public in Hong Kong in 2009, the country’s real estate market was red-hot. The frenzy over the company was so intense that for every lucky person who bought at least one share of stock, 46 others were shut out.

 

How times have changed.

 

Now a symbol of China’s real estate boom and bust, Evergrande was delisted from the Hong Kong Stock Exchange on Monday, four years after the company first warned that it was facing financial difficulties and two years after it sought bankruptcy protection.

 

Evergrande’s collapse, with $300 billion in debt, mirrors the slow and painful unwinding of China’s property sector. Government policies staved off a sudden crash, and instead delivered a grinding slowdown.

 

The housing downturn has not delivered the devastating shock that the United States suffered in the 2008 financial crisis, but it has been hanging over the economy for five years with no end in sight. Last month, new home prices dropped at their fastest pace in nine months and the prices of secondhand homes continued to slide, according to the National Bureau of Statistics of China.

 

As the slump continues, the government has stepped in to prop up just enough indebted property companies to prevent a broad collapse. China Vanke, one of the country’s biggest developers, has repeatedly leaned on its top shareholder, the state-owned firm Shenzhen Metro, for loans to cover obligations from its $51 billion of debt. Shenzhen Metro has extended $3.4 billion over nine loans to Vanke this year. Vanke reported on Friday that it lost $1.7 billion in the first six months from January through June, 21 percent worse than a year earlier.

 

When Beijing rolled out rules in 2020 to curb the excessive borrowing of property developers, it kicked off a downward spiral, pushing many real estate firms to the brink. But the government has stopped short of an industrywide bailout, instead taking steps such as relaxing purchase restrictions and encouraging banks to lend more.

 

Andrew Collier, a senior fellow at the Harvard Kennedy School, said the result was that the “pain is going to go on for a very long period of time.”

 

It’s a different approach from the one adopted in China’s last significant real estate downturn, around 2015, when Beijing spent hundreds of billions of dollars to pay residents cash to trade in dilapidated shacks in smaller cities and towns. While that policy revived the market, it also unleashed another building boom fueled by developers taking on excessive debt.

 

China is “very leery of pouring good money after bad in the property market,” Mr. Collier said, adding that “the notion that the central government is going to bail out the property sector is just not going to happen.”

 

While some of the largest developers are still trying to restructure, many smaller ones have gone under. And the downturn has devastated businesses and jobs in sectors that rose up around the real estate boom, from construction to property sales to landscapers.

 

This month, Hong Kong’s High Court ordered China South City Holdings, a midsize property developer, to liquidate after a judge ruled that it had not made significant progress on its restructuring plans.

 

The continuing property market slide comes at a vulnerable moment for the Chinese economy. A trade war has limited China’s ability to rev up its export engine, while consumer spending remains soft. The government is plowing money into semiconductors, robotics and other technologies, but those investments are unlikely to pay off quickly enough to fill the hole left by a shrinking property sector.

 

It’s hard to overstate the real estate industry’s importance. At its peak, the sector accounted for roughly 30 percent of China’s economy. Proceeds from land sales to property firms filled local government coffers. Many Chinese households turned to real estate, believing it was a safe investment for their savings.

 

The recent data is alarming. While new construction has slowed drastically, the inventory of available homes is growing, not shrinking.

 

In the first seven months of 2025, the amount of new housing under construction nationwide was down almost 20 percent from the same period a year ago, according to the National Bureau of Statistics. The number of vacant homes available for sale is more than twice the historical average, according to Yicai, a financial media and research group backed by the Shanghai municipal government.

 

In February, Victoria Yu, 35, listed for sale an apartment she shared with her husband in Hefei, an industrial city in central China. They had bought the home three years ago for about $330,000 and spent an additional $80,000 decorating and furnishing the apartment. They listed the property, fully furnished, for about their initial purchase price.

 

Dozens of real estate agents and potential buyers expressed interest, but all the offers came in at least 15 percent below her asking price. When buyers came in with a lowball offer, she was furious.

 

Ms. Yu, a marketing officer at an agricultural technology firm, eventually pulled the listing and decided to stay in the apartment because she could not accept losing more than $100,000. She said her mistake was believing that buying an apartment was a sound investment.

 

Her real estate agent advised her to accept a smaller loss now, as “it will be even harder to sell later.” Ms. Yu also does not think property prices in Hefei, a so-called second-tier city that is not an economic and political hub like Beijing or Shanghai, will ever rebound to past peaks.

 

This month, Goldman Sachs said in a research note that the July sales data showed that the few signs of recovering prices in the real estate market had been limited to the top-tier cities.

 

But even in those cities, the local governments are taking steps to spur demand — a sharp reversal of years of measures to tamp down speculative buying. This month, Beijing’s municipal government rolled back longstanding restrictions limiting the number of homes that residents can buy in the city’s suburban areas. Analysts said this might spur other major cities such as Shenzhen and Shanghai to follow with similar moves to ease the supply glut.

 

When Lily Zhang, a technology industry worker, sold her apartment in Beijing this month, she was surprised by how weak the market was. She eventually sold the place for less than what she was asking. But she felt lucky to secure a deal, having encountered mostly “window shoppers” who had no intention of buying.

 

Ms. Zhang said her experience as a Beijing homeowner was a roller-coaster ride. She jumped on the opportunity to buy in 2016, feeling pressured because apartment prices were rising so quickly. The prices continued to surge, prompting agents to call her to gauge her interest in selling. She kept putting it off until she and her husband had a baby, and their apartment suddenly felt too small.

 

But by then, the market had softened and prices were plummeting. She eventually broke even on her purchase, “as if nothing had happened” over the past nine years, she said.

 

“No one was willing to offer a price and that was very scary,” Ms. Zhang added. “When no one offered me a price, I panicked.”

 

Daisuke Wakabayashi is an Asia business correspondent for The Times based in Seoul, covering economic, corporate and geopolitical stories from the region.