China home prices slump deepens as Evergrande worries persist

Beijing: China's property sector has been showing effects of the Evergsande crisis as the price of homes dropped to levels unseen since 2015. Local governments across China are trying to curb home prices from a precipitous drop, while encouraging home buyers to buy mortgaged houses to help cash-stricken property developers to quicken home sales, amid the nation's tightened regulation for the housing market.

The growth rate of China's property development investments slowed to 8.8 per cent in the January-September from 10.9 per cent in the first eight months of the year, data from the National Bureau of Statistics (NBS) showed.

Compounding the Evergrande debt crisis is the fact that China has also been facing massive power cuts across the nation as it struggles with coal production which has Been in a slump since the Covid-19 pandemic struck. A rising tide of new infections has also triggered further regulation and lockdown which has also hit the economy hard.

Last week, Evergrande, which is saddled with around $300bn (£223bn) of debt, avoided defaulting on overdue interest payments of $148m. Just days before a 30-day grace period on the payments were set to expire it sold a 5.7% stake in media firm HengTen Networks Group for around $145m.

The Chinese government has tried to ease worries by assuring the world that the property crisis would not spiral out of control, as it stepped into damage-control mode by ordering government entities to purchase the ailing Evergrande's assets. On Monday, the governor of the Bank of Japan Haruhiko Kuroda told reporters that he believed that China's property woes were unlikely to trigger a global shock as the amount of money owed to creditors outside the country was relatively low.

China's overall property and construction sector contracted in the third quarter for the first time since the start of the coronavirus pandemic, hamstrung by the slump in the urban real estate sector.