China Housing Crash: 15-Year Lows Spark Economic Fears

China is grappling with a severe real estate crisis, as new home sales have reached their lowest point in over fifteen years. Existing apartment prices are experiencing significant declines, leading millions of households to curb spending due to the diminishing value of their homes. This economic pressure has also impacted local governments, whose revenue streams are heavily dependent on property transactions, leading to difficulties in paying civil servants.

The housing market crash, which began four years ago and has progressively worsened, has become a more significant challenge for Beijing than earlier concerns about trade wars. While official statistics report steady economic growth of 5 percent for last year, driven by a boom in exports, some Western economists and research firms estimate the actual growth rate to be much lower, between 2.5 and 3 percent.

Experts like Zhu Tian from China Europe International Business School in Shanghai suggest the real estate sector's sharp slowdown largely explains the lackluster economic performance over the past three years. The market faces prolonged transaction times, with homes staying on the market for an average of 22.2 months. Despite some analysts predicting a recovery this year, the market remains deeply pessimistic, with some experts believing the issues could persist for a decade.