As homes fail to sell in mainland China’s depressed market, sellers turn to superstition
News Summary
In mainland China's deeply depressed property market, homeowners are struggling to sell properties, leading some to resort to superstitious practices like prayers, talismans, and feng shui. This desperation highlights the severe pessimism among sellers as second-hand home prices continue to fall for over three years. Real estate agents confirm that homes are taking longer to sell due to low demand, giving buyers significant leverage in price negotiations. The longer properties remain on the market, the lower the eventual selling price is likely to be, exacerbating sellers' financial distress.
Background
China's real estate market has been in a downward cycle since 2021, with numerous developers facing debt crises and new home sales plummeting. The secondary housing market has not been spared, experiencing shrinking transaction volumes and continuously falling prices. Despite a series of loosening policies introduced by the government to stabilize the market, their impact has been limited, and market confidence remains fragile. This news report indicates that in the fifth year of the property market's downward spiral, sellers' desperation has reached new heights, with some resorting to unconventional methods to address sales difficulties, reflecting dimming hopes for fundamental market improvement.
In-Depth AI Insights
What deeper economic and social implications of China's property market downturn does the rise of superstitious practices reveal? - It signals that market confidence has plummeted to an all-time low, where traditional economic incentives are no longer sufficient to influence individual behavior. - Seller desperation could trigger a reverse 'wealth effect,' suppressing consumer spending and investment, posing a challenge to broader economic recovery. - This social phenomenon may also reflect a declining trust in the government's ability to resolve the real estate crisis, forcing individuals to seek irrational comfort. In the face of such widespread desperation, how might the Chinese government's real estate policies evolve, and what are the long-term implications? - The government might be compelled to consider more aggressive interventions, such as direct purchases of excess inventory or greater buyer subsidies, to avert systemic risks. - In the long run, if the market fails to recover naturally, the government might shift towards stricter market controls or even de-financialize real estate, positioning it as a basic living necessity rather than an investment tool. - This could lead to long-term suppressed investment returns for real estate assets, altering the asset allocation structure of Chinese households and diminishing real estate's appeal as a store of wealth. Beyond direct real estate investment, what contagion risks or shifts in investment could this prolonged downturn and market sentiment indicate for other asset classes? - Diminished real estate wealth might prompt funds to seek safe-haven assets like government bonds or gold, though China's capital controls might limit such outflows. - Some domestic capital could pivot towards the stock market, seeking policy-supported 'new economy' sectors, but may also face uncertainty due to overall economic slowdown. - Over the long term, households and businesses might increasingly favor more liquid and internationalized assets, potentially leading to increased capital outflow pressure if capital controls permit.