China’s most aggressive stimulus package to rescue its beleaguered real estate sector, using the unprecedented line of “stabilizing the housing market and halting its decline,” underscores the urgent need to fix this problem.
What Beijing cannot repair fast enough are the cracks that have developed since the ill-fated “three red lines” policy of August 2020. The disaster brought by the ensuing Covid-19 pandemic has also eroded home prices, disposable income and, above all, confidence among homebuyers. .
This puts Kang Zhao, a 33-year-old insurance professional in Changsha, southern Hunan province, in a dilemma. He said the People’s Bank of China’s (PBOC) decision to lower payments on second homes and current mortgage rates is “very attractive.” However, his current finances make it nearly impossible to start looking for a new home.
“My income has decreased by about 30 percent since last year due to the difficulties my company is facing, so my ability to spend has decreased a little,” he said. He added that lower mortgage costs do not free up enough extra money to buy another home.
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Chinese consumers are tightening their belts: what does this mean for the rest of the world?
Chinese consumers are tightening their belts: what does this mean for the rest of the world?
