Beijing [China], July 27 (ANI): China is currently grappling with an economic slowdown along with a housing crisis as numerous Chinese citizens are boycotting mortgages because they are not getting possession of their accommodation units on time.
The official data indicates that the economic growth has declined sharply in the second quarter of the year, reflecting the impact of the ‘Zero-Covid’ policy, a US-based publication said.
The ‘Zero-Covid’ policy of China, under which full or partial lockdowns were imposed in major centres, has had a negative impact on businesses.
“Domestically, the impact of the epidemic is lingering,” the Statistics Bureau reported while highlighting the shrinking demand and disrupted supplies.
The output decreased by 2.6 per cent between April and June in comparison with the previous quarter, the data released by the Statistics Bureau (July 2021) said.
On an annual basis the economy grew by 0.4 per cent in the second quarter, US-based publication Financial Post said.
It would be difficult for China to meet its growth target of around 5.5 per cent unless the country reports a huge acceleration in the second half of the year, it added.
Youth unemployment in the country has witnessed a 19.3 per cent rise, as per China’s Statistics Bureau.
There is a deep slump in the country’s property market. According to reports, several homebuyers are not paying their mortgages over worries about their unfinished homes.
Over 230 house owners across 86 cities refused to make mortgage payments for unfinished, pre-sold units unless construction resumes, according to Github.
Mortgages worth over 2 trillion yuan are currently stalled at Chinese housing sites.
A viral documentary showed how hundreds of homebuyers in Xi’an city have had to live in unfinished apartments struck a chord with many Chinese homebuyers, a media report said.
The primary cause behind the housing crisis is that house buyers are not confident and don’t trust that their housing units will be completed.
The housing sector is an essential sector of the Chinese economy as new home purchases constitute over 80 per cent of China’s property industry.
It is noteworthy that 50 per cent of income from home sales is used by private developers to fund new projects.
There is a domino effect as 30 per cent of local government revenues come from land transfers, the publication added.
Many Chinese developers have experienced a liquidity crisis since last year after a regulatory crackdown came into effect to lower property prices and they have missed payments on offshore high-yield US dollar bonds.
Chinese developers have only delivered 60 per cent of pre-sold homes between 2013 and 2020, and mortgage loans increased by 26.3 trillion yuan during the same period, as per the estimates of Nomura, a Japanese financial holding company. (ANI)
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