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The number of homes in China being taken away from their owners because they couldn't pay their debts increased by 32.3% in the first nine months of this year. This happened because many people were struggling with debt due to the property market not doing well and the economy not being very stable. A private survey found that from January to September, 584,000 properties were foreclosed, which is a big jump from the 441,000 foreclosures during the same time last year. The survey was done by China Index Academy, a big real estate research company.
The number of homes that were taken away from their owners in the first three quarters of 2023 went up to 284,000 from 206,000 in 2022. Also, fewer people were buying these foreclosed homes at auctions, as the number dropped by 4.8% to 25.7%. Most of these foreclosures happened in the province of Sichuan, which is in the southwest of China. There, the number of foreclosed homes increased by 27,585, reaching over 70,000 in total.
Even though China's economy grew faster than expected in the third quarter of this year, experts are worried about the property market. They think it's in trouble, and this problem could affect not only the financial sector in China but also in other countries. So, while the economy seems to be getting better, the property market is still a big concern.
The decline in China's home sales in October showed signs of slowing down, largely due to increased efforts from the Beijing government to bolster the housing sector. Preliminary data from China Real Estate Information Corp revealed that the value of new home sales among the top 100 real estate companies decreased by 27.5% compared to the same period the previous year, totalling 406.7 billion yuan (approximately $55.6 billion). This decline, while still significant, was a slight improvement from the 29.2% drop witnessed in September. On a monthly basis, there was a 0.6% increase in sales.
China's real estate market has been grappling with a prolonged downturn, which has left developers cash-strapped, delayed construction projects, and removed a vital economic driver. Although recent economic data suggests that the government's growth target of around 5% for the year is well within reach, S&P Global Ratings cautioned that this figure could drop to 2.9% in 2024 if the property crisis continues to worsen.
To combat the downturn, authorities have introduced measures such as reducing down-payment requirements and encouraging lenders to lower interest rates on existing mortgages. Nevertheless, in September, home prices experienced their sharpest decline in almost a year, which has affected sentiment in a country where property has traditionally been a significant source of wealth.
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