Evergrande: Panicked Chinese home purchasers feel the effects of the crisis

 Evergrande: Panicked Chinese home purchasers feel the effects of the crisis

Regarding the house she had purchased, Mrs. Guo says, "When I think about it, I cry. It's difficult, and I feel bad for both my son and myself.

Guo Tianran (whose name has been altered upon request) and her husband purchased an off-the-plan condominium for their only child from the top-selling developer in 2021, only months before the Chinese real estate mogul Evergrande displayed the first signs of disaster.

The approaching-senior-age couple had to make sacrifices in order to pay the $30,000 (£24,500) down payment for the unfinished apartment. They took the risk of promising to pay the mortgage with 75% of their income.

According to Mrs. Guo, "We wanted to help our son, to give him a place to start out on once he graduates from college," she said in an interview with the BBC earlier this month. However, a few months after they made their purchase, Evergrande's façade started to break.

Construction stopped in Henan, the province in central China where they had purchased the house.

"We observed the construction of the main frame before hearing the abrupt sound of Evergrande collapsing. Then, last year, construction came to an end," she adds.

Why is it important that Evergrande fails?

Evergrande failed to make more than $100 million in payments to foreign lenders before September 2021. The number of unfinished dwellings owned by the company was estimated to be over 1.5 million at the time. Two years after the default, China is still experiencing a real estate crisis that is spiraling out of control. The bankrupt company has been attempting to reach a recovery agreement for the past 18 months, but this week's revelation that its founder Hui Ka Yan and other senior leaders have been detained by authorities has revived concerns about its future.

"I paid the down payment with some of my retirement funds. The mortgage will be paid off over the course of the next 30 years, according to Mrs. Guo, who was first assured she would receive the keys by the end of this year.

Her worries, though, have grown as China's property problem has: "We don't want to end up with nothing," she said.

The fear that their ambitions have been destroyed is one that so many other people who have invested their entire life savings in a new home share.

The fact that Evergrande is not the only real estate developer in serious problems only serves to increase the anxiety. Country Garden, a different real estate behemoth, disclosed a record $6.7 billion half-year loss. Analysts believe that it has sold a million unfinished homes.

Zhang Min, a 31-year-old resident of Henan, claimed, "I nearly purchased an apartment from Country Garden."

She told the BBC that she and her fiance intended to purchase the property and make it their married residence. The young couple had been informed they could purchase a cheaper property in August since her parents' home had been constructed by Country Garden. When they learned that the company was about to default, they had second thoughts.

We're definitely not delaying our wedding because we choose not to purchase a new house. The notion of "newlyweds living in a new house" will just have to go, adds Ms. Zhang.

"The property market in China has only increased for the past 20 years, according to my parents' generation. People in my neighborhood are currently all concerned about the decline in home prices.

A third of China's GDP is made up of the real estate sector, raising concerns about how this may affect related businesses like household appliances and the production of building materials like steel and cement. And yet, Beijing faces yet another crisis in addition to its ongoing struggles with sluggish GDP, declining exports, and a youth jobless rate that has surpassed 20%.

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Beijing has made an effort to allay popular anxiety. Mr. Hui being placed under police monitoring has received minimal coverage in state media, and the foreign ministry appeared to avoid reporters' questioning about it during its daily press briefing on Thursday. On Chinese social media sites like Weibo, the news has become a top trend, with more than 600 million views centered on the subject of Mr. Hui's surveillance alone.

Many Weibo users criticized the way Evergrande and other real estate tycoons were permitted to advance to this position. Users have questioned why there weren't enough protections for buyers.

One user commented, "Because of insufficient mechanisms and regulation, it's almost become a norm that companies could 'blow up'." Since Evergrande's position has exposed systemic flaws—the results of excessive borrowing and deep discounts to entice buyers—there appears to be concern that the real estate crisis could spread to more developers.

How will they ever provide [those] apartments, a different user questioned? Many of these flats were purchased with savings and laborious earnings from multiple generations of families?

Additionally, people were discussing their experiences as frightened and disheartened home buyers. In one video on Douyin, China's equivalent of TikTok, a man said that in order to pay his mortgage and his current rent since he can't move into his unfinished Evergrande apartment, he had to work three jobs.

There were demonstrations in front of Evergrande's offices in Shenzhen, southern China, when the company's problems initially came to light two years ago. Recent months have seen a resurgence of those protests. Purchasers chanted, "Construction stops, mortgage stops," at a recent demonstration. "Deliver homes and receive payment!"

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Mrs. Guo claims that neither she nor the other Evergrande purchasers are passively watching. On WeChat, they created three groups that each have close to 500 members.

"We have planned to approach the government. They can't possible ignore it with so many of us here," she remarked.

She also disclosed to the BBC that she had received warnings from local authorities not to speak to the media, along with assurances that construction work would soon resume at the Evergrande property where she had purchased a flat.

However, a few of her group's members often visit the construction site. They've only observed a few workers and very little development.

Some of us have ceased making mortgage payments, said Mrs. Guo. "They will sleep in the bank lobby if the bank pushes too hard."