'I cried for days': Chinese home buyers stung by real estate slump

Many left high and dry after housing projects were left unfinished by developers who ran into liquidity woes

- Aw Cheng Wei

BEIJING Farmer Chen Mei spent all her savings and borrowed from family and friends to cobble together 346,000 yuan (S$65,000) to help her son buy a flat in Kunming, capital of south-western Yunnan province.

The flat was supposed to be ready in 2021, but construction stopped after the developer ran out of money.

Madam Chen, 53, told The Sunday Times: "I cried for days, and my son and husband had to console me and watch over me to stop me from doing anything silly. I'm also too ashamed to face my relatives and friends, even though they said that they understand my situation and do not pressure me into paying them back." A slump in China's property sector has had ripple effects across its economy, puncturing consumer and business confidence, and leaving many ordinary citizens like Madam Chen and her son high and dry.

In tandem with rapid urbanisation, China's property market has enjoyed a boom over the past three decades, underpinned by the Chinese belief that owning one's home provides financial security.

At their peak in the late 2010s, home prices in Shanghai were as high as London's; even in cities less developed than Shanghai such as Chongqing and Tianjin, double-digit increases in the price of homes yearly made them out-of-reach for many locals.

But good times for the developers unravelled three years ago.

In August 2020, the Chinese government rolled out measures to cut off property developers' access to easy credit to keep a lid on their ballooning debt. These companies had expanded into industries unrelated to their core business such as wealth management, water, electric cars, agriculture and robotics, with their debt posing a systemic risk to the Chinese economy.