July 29, 2022
1 min read

China vows rescue fund to offset realty crisis

Experts say the boycott is a byproduct of two decades of insufficient oversight over a red-hot real estate sector…reports Asian Lite News

Chinese authorities are promising to establish an initial rescue fund of $11.8 billion (80 billion yuan) to offset a looming crisis in the real estate sector, where home buyers routinely purchase residences from developers’ plans and begin making mortgage payments before the dwellings are finished, media reports said.

By having customers purchase homes “off plan,” builders can receive construction financing and shift risks – such as costly pandemic-related supply chain delays and bankrupt builders – to the middle-class homebuyers, the VOA reported.

For many buyers, the risks seemed worth it. But then China’s Covid-cooled economy strained many family budgets, and draconian lockdowns stalled work on residential projects. As home prices fell, some buyers found themselves paying mortgages on properties worth less than what they had agreed to pay. That was followed by the tightening policies in August 2020, when the central government realized real estate developers’ debt was getting out of control, and draconian lockdowns stalled work on residential projects.

Amid all this, many home buyers announced they would stop making mortgage payments to banks until work resumed on unfinished projects, VOA reported.

Experts say the boycott is a byproduct of two decades of insufficient oversight over a red-hot real estate sector. One economist likened the situation to a Ponzi scheme, a type of fraud that pays existing investors with funds collected from new investors.

An economist in China, who requested anonymity due to fear of reprisal said that real estate companies have never been regulated.

“When the economy is good, with the continuous expansion, most of the properties can be delivered. But when the economy is not good, it becomes a bit like a Ponzi scheme. If there is no follow-up funding, they will not able to complete construction,” she said, VOA reported.

ALSO READ: Tibetan arrested in China for creating social media group

Previous Story

Nepal, India ink fertiliser deal

Next Story

Chinese court jails poet who called on Xi to step down

Latest from -Top News

Business Leaders Laud UK-India Trade Deal

The British government described the deal as the “biggest and most economically significant” trade agreement the UK has signed since leaving the European Union in 2020. Business leaders have today expressed strong

US Lawmakers Backs India’s Retaliation

Indian-American Lawmakers Endorses India’s Swift Response to Pakistan Tensions…reports Asian Lite News On Wednesday, one US lawmaker of Indian descent urged Pakistan not to exploit the ongoing tensions with India as an

U.S. Raises Alarm for Americans in Pakistan

Earlier, the US Department of State had issued a travel advisory in March, also urging its citizens to “reconsider travel to Pakistan due to terrorism and the potential for armed conflict.”…reports Asian Lite

Khawaja Asif: Peace Only If India Backs Down

The Indian strikes and Islamabad’s retaliation has jolted locals who fear that it could potentially lead to a full-scale war between the two countries…reports Asian Lite Ndews Pakistan’s Defence Minister Khawaja Asif
Go toTop

Don't Miss

Belgian Parliament passes motion recognising Uyghur genocide

The WUC also extended its heartfelt gratitude to all those

China oil giant likely to enter Lankan market

This comes as Sri Lankan Cabinet Ministers in the month