(speaking in foreign language)
- Some property developers in China
are going to great lengths to attract home buyers.
(speaking in foreign language)
One offered cars and parking spots as a gift,
while another promised to give the buyer a Mercedes-Benz
with the purchase of a villa.
One developer even offered to accept garlic
as part of the down payment.
The ads suggest that for Chinese property developers,
demand is down.
Since the summer of last year,
home sales for China's 100 biggest property developers
Home sales, of course, are not just struggling in China,
in the Western world as well.
Home sales have been under pressure
after record surge in prices.
Inflation has become a problem
and fears of a recession are growing.
But in China, there are a number of different factors,
including concerns about the debt levels
of property developers,
as well as COVID 19 lockdowns.
China is the world's second largest economy,
so anything that happens
within its own borders and in its own economy
has ripple effects for the rest of the world.
So here's how the government and property developers
are rolling out measures to help boost home sales.
China's real estate market has become
perhaps the most important industry of all
in China's economy.
The estimates tend to be that the real estate market
accounting for between 25%
even up to one third of China's economy.
Home prices had just gone up every year for several decades.
It also enriched a lot of property developers
and had them trying to race ahead of one another
to buy more land and to bring in more presales
so that they could fill their coffers
and buy ever more land.
And that model was perhaps most clearly exemplified
by a company called Evergrande,
that is one of the country's biggest property companies
as well as one of the most indebted,
it quickly found itself pushed to the brink of collapse.
Chinese regulators last year began to take
the most concrete steps that they have taken yet
to try and curb developers' debt levels.
(protesters speaking in foreign language)
That created a crisis at Evergrande,
which jolted consumer confidence in the market,
causing concerns about China's economic growth
as well as whether other real estate companies
could fall too.
In addition to the regulatory pressures,
developers also faced another foe
in the form of COVID 19 lockdowns.
It kept potential home buyers
in many cities and provinces across China, home bound.
So both property developers and Chinese government officials
have started to take some steps
to arrest the slide in home prices,
and maybe even to perk them up a little bit.
On the government side, officials in dozens of cities
and other jurisdictions across the country
lowered mortgage rates
and made it easier to buy an apartment,
if you're young and on the market.
Meanwhile, among property developers,
they're advertising free gifts with a home purchase.
Some have gone to even more creative measures.
For example, one company is giving out an actual pig,
while another is offering job opportunities.
The response from the Chinese public has been mixed.
If you look online, you'll find some comments
that talk about interest in buying an apartment,
but you also see some skepticism online too.
It does seem gimmicky to some people,
and for many people,
the question is whether or not they feel confident
going out and buying an apartment.
The real question, of course,
is how effective these policies can be.
It's probably gonna rely more on big macroeconomic factors
rather than on what freebies developers throw in,
or what incremental loosening measures
one's city or town has.
To build at the pace
that China has been building at for the last few years
consumed a vast quantity of inputs
that were acquired from outside of the country.
So any sharp slowdown that we see in housing
is gonna have impact on commodity producing countries
all around the world.
And so that is something
that people all around the world are gonna be watching,
whether the Chinese home buyer comes back,
and whether these developers survive and thrive.