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China's Property Developers Offer Cars, Pigs as Real Estate Confidence Wanes | WSJ - YouTube
Channel: unknown
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(speaking in foreign language)
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- Some property developers in China
[3]
are going to great lengths
to attract home buyers.
[7]
(speaking in foreign language)
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One offered cars and
parking spots as a gift,
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while another promised to
give the buyer a Mercedes-Benz
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with the purchase of a villa.
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One developer even
offered to accept garlic
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as part of the down payment.
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The ads suggest that for
Chinese property developers,
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demand is down.
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Since the summer of last year,
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home sales for China's 100
biggest property developers
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have tumbled.
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Home sales, of course, are
not just struggling in China,
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in the Western world as well.
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Home sales have been under pressure
[40]
after record surge in prices.
[42]
Inflation has become a problem
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and fears of a recession are growing.
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But in China, there are a
number of different factors,
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including concerns about the debt levels
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of property developers,
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as well as COVID 19 lockdowns.
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China is the world's
second largest economy,
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so anything that happens
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within its own borders
and in its own economy
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has ripple effects for
the rest of the world.
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So here's how the government
and property developers
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are rolling out measures
to help boost home sales.
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China's real estate market has become
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perhaps the most important industry of all
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in China's economy.
[75]
The estimates tend to be
that the real estate market
[78]
accounting for between 25%
[80]
even up to one third of China's economy.
[82]
Home prices had just gone up
every year for several decades.
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It also enriched a lot
of property developers
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and had them trying to
race ahead of one another
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to buy more land and to
bring in more presales
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so that they could fill their coffers
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and buy ever more land.
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And that model was perhaps
most clearly exemplified
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by a company called Evergrande,
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that is one of the country's
biggest property companies
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as well as one of the most indebted,
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it quickly found itself pushed
to the brink of collapse.
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Chinese regulators last year began to take
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the most concrete steps
that they have taken yet
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to try and curb developers' debt levels.
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(protesters speaking in foreign language)
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That created a crisis at Evergrande,
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which jolted consumer
confidence in the market,
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causing concerns about
China's economic growth
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as well as whether other
real estate companies
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could fall too.
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In addition to the regulatory pressures,
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developers also faced another foe
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in the form of COVID 19 lockdowns.
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It kept potential home buyers
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in many cities and provinces
across China, home bound.
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So both property developers and
Chinese government officials
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have started to take some steps
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to arrest the slide in home prices,
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and maybe even to perk
them up a little bit.
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On the government side,
officials in dozens of cities
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and other jurisdictions across the country
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lowered mortgage rates
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and made it easier to buy an apartment,
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if you're young and on the market.
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Meanwhile, among property developers,
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they're advertising free
gifts with a home purchase.
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Some have gone to even
more creative measures.
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For example, one company is
giving out an actual pig,
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while another is offering
job opportunities.
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The response from the Chinese
public has been mixed.
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If you look online,
you'll find some comments
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that talk about interest
in buying an apartment,
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but you also see some
skepticism online too.
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It does seem gimmicky to some people,
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and for many people,
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the question is whether
or not they feel confident
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going out and buying an apartment.
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The real question, of course,
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is how effective these policies can be.
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It's probably gonna rely more
on big macroeconomic factors
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rather than on what freebies
developers throw in,
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or what incremental loosening measures
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one's city or town has.
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To build at the pace
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that China has been building
at for the last few years
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consumed a vast quantity of inputs
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that were acquired from
outside of the country.
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So any sharp slowdown
that we see in housing
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is gonna have impact on
commodity producing countries
[233]
all around the world.
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And so that is something
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that people all around the
world are gonna be watching,
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whether the Chinese home buyer comes back,
[241]
and whether these developers
survive and thrive.
[243]
(bright music)
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