- Written by Yang Chen & Francis Mao
- in Hong Kong and Singapore
“When I think about it, I cry,” Guo said of the house he bought. “It’s very difficult, and I’m sorry for both my son and myself.”
In 2021, just months before Chinese real estate giant Evergrande showed the first signs of crisis, Guo Tianlan (names changed on request) and her husband built an off-plan apartment for their only child to become a top seller. Purchased from the developer.
The couple, nearing their 60s, had made a stingy $30,000 (£24,500) down payment on a yet-to-be-built apartment. They renewed their commitment by pledging to use 75% of her income to pay the mortgage.
“We wanted to help our son and give him a place to start anew once he graduates from university,” Mrs Guo told the BBC earlier this month. But just a few months after the purchase, cracks began to appear in Evergrande’s façade.
In central China’s Henan province, where they bought their home, construction of workshops has stopped.
“We saw the mainframe being built, and then suddenly we heard the sound of Evergrande collapsing. Then construction stopped last year,” she says.
In September 2021, Evergrande failed to repay more than $100 million to offshore lenders. At the time, it was estimated that the company had more than 1.5 million unfinished homes. The default highlights China’s real estate crisis, which continues two years later. The bankrupt company has spent the past 18 months trying to reach a restructuring agreement, but this week’s news that founder Hui Kar Yan and other executives have been detained by police has left the company’s future in doubt. Vigilance is once again on the rise.
“I used part of my retirement savings for the down payment. We’ll pay it.” [off the] I need a mortgage for the next 30 years,” said Guo, who was initially told he would receive the keys by December this year.
But as China’s housing crisis worsened, so did her concerns. “I don’t want to end up with nothing,” she said.
Many people who have invested their life savings into building a new home fear that their dreams have been shattered.
What’s even more worrying is that Evergrande is not the only real estate developer in serious trouble. Country Garden, another real estate giant, reported a record half-year loss of $6.7 billion. Analysts estimate that the company has sold 1 million unfinished homes.
“I almost bought an apartment from Country Garden,” said Zhang Ming, 31, who also lives in Henan province.
She told the BBC that she and her fiancé had been planning to buy the place as a marital home. Her parents’ home was built by Country Garden, and the young couple had been told they would be able to purchase the property at a discount in August. But they changed their minds when they heard that the company was on the verge of defaulting on its debts.
“Just because we didn’t buy a new house doesn’t mean we’ll postpone the wedding. We should stop pursuing the idea of ’newlyweds living in a new house’,” Zhang said. To tell.
“My parents’ generation has seen China’s housing market only go up for the past 20 years. Lately, everyone around me has been worried about falling house prices.”
China’s real estate market accounts for one-third of the economy, and there are growing concerns about the impact on related industries, from construction materials such as steel and cement to home appliances. But this is another crisis for Beijing, which is also grappling with slowing growth, declining exports and rising youth unemployment above 20%.
The Chinese government has sought to allay public concerns. State media have reported little about Hui being under police surveillance, and the Foreign Ministry appears to have declined questions from reporters about the matter at a regular press conference on Thursday. However, the news became a top trend on Chinese social media platforms such as Weibo, with the topic of Hui’s surveillance alone being viewed more than 600 million times.
Many on Weibo criticized how Evergrande and other real estate giants were allowed to get to this point. Users are wondering why there wasn’t enough protection for buyers.
“It’s almost normal for companies to go bankrupt due to inappropriate mechanisms and regulations,” one user wrote. Evergrande’s situation exposed systemic flaws, and there appears to be concern that the real estate crisis will spread to more developers. The company’s coffers were depleted by excessive borrowing and deep discounts to lure buyers.
Another user asked: “How do we provide it? [those] Apartment? Are many of these units paid for with multiple generations of family savings and hard-earned money? ”
People also shared their experiences as disillusioned and anxious homebuyers. In a video on Douyin, China’s version of TikTok, a man said he has to work three jobs to pay both his mortgage and current rent. This is because they cannot move into the unfinished Evergrande Apartment.
When Evergrande’s failures were first revealed two years ago, protests erupted outside the company’s offices in Shenzhen, southern China. Such demonstrations have begun again in recent months. At one recent protest, buyers chanted: “Stop construction, stop mortgages. Give us your house and pay us back!”
Mrs. Guo says she and other Evergrande buyers are not sitting idly by either. They have formed three groups on WeChat, each with nearly 500 members.
“We organized to consult the government. With so many people, the government cannot ignore it,” she said.
She also told the BBC that she had been warned by local authorities not to speak to the media, and promised that construction work would soon resume on the Evergrande property where she bought the apartment.
However, several members of her group check on the construction site every day. They have only identified a few workers and have seen minimal progress.
“Some people have stopped paying their mortgages,” Guo said. “If banks push too hard, they’ll end up sleeping in bank lobbies.”
With additional reporting by Ian Tang and Kelly Ng in Singapore
Yang Chen is a reporter for BBC Chinese