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The housing market in China saw home sales fall sharply in July as underlying economic problems became more apparent.
Revenue in July fell 39.7% from the same period last year, down about $77.6 billion — or 523.14 billion yuan. From June to July alone, there was a 28.6% drop, ending a two-month rally.
Home sales were up in May and June from the previous months, but July largely dampened those gains, according to The Wall Street Journal.
“China’s economy has been slowing for quite some time,” Craig Singleton, a staffer at the non-partisan Foundation for the Defense of Democracies, previously told Fox News Digital. “What we are witnessing now is a rapid economic slowdown.”
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Singleton argues that while COVID-19 played a role in the initial troubles, China’s slowing recovery is due to “deeper structural, systemic issues.”
Aerial photo shows the construction site of New York University’s new campus, NYU Shanghai, in Shanghai, China, Feb. 16, 2022. (Fang Zhe/Xinhua via Getty Images)
“One of them happens to be … China’s highly leveraged real estate market by conservative estimates,” he said. “China’s real estate sector accounts for 30% of China’s GDP, so even small deviations in this market can have outsized implications for China’s broader global domestic product and growth.”
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The Chinese real estate market saw a sales boom fueled by debt-financed construction projects where houses were sold before they were built. The lack of completed projects prompted protests from disgruntled homebuyers who refused to pay their mortgages.
FILE – Apartments under construction are pictured from a building during sunset in the Shekou area of Shenzhen, city of Guangdong province, China, November 7, 2021. (Portal/David Kirton)
Hundreds of buyers of around 320 projects across the country have refused to pay their mortgages as of July 29. These potential buyers have instead turned to buying used homes or newly built government homes, which can be cheaper.
Even cutting interest rates and down payments, or offering cash subsidies outright, hasn’t helped spark enough activity to prop up the flagging housing market. Local authorities have considered offering substantial aid to cash-strapped developers.
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“The sector will not stabilize unless developers’ liquidity crunch is alleviated,” said Song Hongwei, research director of Tongce Research Institute.
Peter Aitken is a reporter at Fox News Digital specializing in national and global news.