According to official data issued on Wednesday Dec. 1, China’s property market crisis deteriorated further in November, with prices for both new and resale homes falling amid weaker demand in bigger cities, as BBC reported.

This sharp slowdown raises major concerns as the home market represents 25% of the GDP, some measures are being taken to tackle this issue.

The property sector in recent months has been characterised by a sharp slowdown, as well as shocks amid tightened regulations, liquidity crisis and major indebted developers.

That has been the first and biggest fall in new home prices since 2015. New construction starts also saw a decrease of 7.7% as against a year earlier.

The debt crisis that the real state giant Evergrande is facing has also affected the property market at home and abroad, as Evergrande is struggling to cancel its overdue payments.

The market is also affected by a surge in Covid cases and major power outages across the country.

Policies

In an attempt to mitigate the negative impact of fast deteriorating conditions in the property sector, including induced speculation, Chinese policymakers may begin to adjust tough restrictions on buyers and developers and even lower interest rates, Reuters reported.

While some financial measures might be needed to help genuine home buyers, generally policymakers are expected to preserve for now, Reuters added.

As a step forward to mitigate a liquidity crisis, last week the southwestern city of Chengdu exerted their effort to assure developers receive funds from pre-sold properties and fresh loans.

Regarding banks, either expediting the disbursement of approved mortgages or providing more loans to property firms for project development was encouraged.

Facing concerns among some international investors about domino effect of China’s property crisis on global financial markets, recently, a number of high-profile figures have moved to help calm those fears, according to BBC.

On Nov. 15, Haruhiko Kuroda, the governor of the Bank of Japan, said he believed that China’s property crisis was unlikely to provoke a global shock as the proportion of money owed to foreign creditors was relatively low, BBC added.

The property downturn is predicted to continue into the first half of 2022, according to a recent note by Oxford Economics.

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