WEEKS AHEAD of the Chinese Communist Party’s 20th congress, at which Xi Jinping, the country’s president, is expected to secure a third term as party leader, an already big problem is becoming even more alarming. More than two-thirds of urban households’ wealth is tied up in property and the industry underpins a fifth of GDP. The housing market is slumping into a deepening hole, dragging the economy down and even causing small outbreaks of social unrest.
The frenetic pace of house building used to be emblematic of China’s rise. Now confidence in the model has collapsed. Buyers are dropping out, borrowers are on mortgage strikes and developers face a liquidity squeeze. In July the value of new home sales fell by 29% compared with a year earlier. Country Garden, China’s biggest developer, has reported that its profits have collapsed and says the market “has slid rapidly into deep depression”.