Property Problems In Beijing Finds More Boycott Payments

The pledge is current in Chinese authorities to please A Homebuyer Revolt Nationwide. An increasing number of disgruntled home buyers are reluctant to pay mortgages on incomplete projects, aggravating the country’s real estate woes and increasing tensions about social unrest and a systemic financial
The movement is a symbol of how a liquidity crunch tackled by developers is spilling over to other aspects of society.

The problem started in 2020 when Beijing began cracking down on immoderate borrowing by developers in a bid to check their high debt and curb runaway housing prices. The hard times escalated last year when Evergrande — the nation’s most indebted developer — scrambled to increase cash to repay lenders. As the property sector cools off, several companies are looking for prevention from creditors. Serval property projects in the country are delayed or suspended because of developers’ cash crunch.

Public aggression is rising over stalled projects, as many homebuyers had started repaying mortgages before they owned the new property. In China, real estate firms can sell homes before completing them and use the funds to finance construction. It’s the most common way of selling houses in the industry.

The mortgage boycott could cause rising bad loans at banks and dampen the sentiment further in the property sector, according to analysts. If sales decline further, developers could face a bigger cash problem, which might lead to more debt defaults and project delays, creating a vicious cycle in the market. The property crisis will also place a significant strain on the economy and financial system — real estate and related industries account for as much as 30% of China’s GDP.

Earlier this week, the central Chinese city of Zhengzhou set up a property developer bailout fund to address unfinished projects, one of the first bailout measures by local governments to tackle the mortgage boycott.

The fund will be jointly set up by Zhengzhou-based Henan Asset Management and Zhengzhou Real Estate Group, according to a statement by the asset manager on Tuesday. Zhengzhou is the capital city of central Henan province and is currently at the centre of the nationwide mortgage boycott. Local governments in the province back both companies.
The fund will be used to “revive problematic property projects and bail out struggling developers,” the statement said, without disclosing how big the fund would be.