China Home Sales Plunge in July, as Mortgage Revolt Deters Buyers

A nascent two-month recovery in China’s home sales ended in July, as a widespread mortgage revolt over concerns that ailing property developers wouldn’t be able to deliver still-unfinished apartments weighed on demand.

Sales at the country’s top 100 property developers fell 39.7% in July from the same period last year to the equivalent of $77.6 billion, or 523.14 billion yuan, according to data released Sunday by CRIC, a Chinese real-estate data provider.

July sales were down 28.6% from June, ending a two-month recovery in month-to-month sales growth. Apartment sales showed increases in May and June from the previous months, as activity picked up following Covid lockdowns in Shanghai and other Chinese cities earlier this year.

China’s private-sector property developers went on a yearslong, debt-fueled building boom, selling homes before they were built, until a funding crisis that began last year led to defaults and stalled projects. Buyers who typically sank large down payments into those homes have been venting their frustrations all summer.

China’s home sales often experience a lull in July, because developers rush to book sales in June to meet first-half targets. But analysts said the main drag on activity this time has been the mortgage revolt and its impact on would-be buyers’ confidence.

The revolt started at the end of June at an Evergrande project in Jingdezhen, in central China’s Jiangxi province, where frustrated home buyers threatened to renege on mortgages on unfinished properties. Hundreds of buyers from roughly 320 projects across the country had followed suit as of July 29, according to a tally of statements from homeowners who said they will stop paying their mortgages circulating on GitHub, a Microsoft Corp.-owned coding-collaboration site.

Home buyers—some waving signs saying “Construction stops and mortgage stops!”—say the threat to halt payments is the only way to get their voices heard as projects stall and delivery times drag out. A broadly slowing economy that is biting into employment and incomes is adding to the pressure. Some buyers say they are increasingly unwilling to keep paying for a home they aren’t sure they will ever receive.

Week-over-week data put together earlier by CRIC to study the impact of the mortgage revolt had signalled the July decline. In 30 cities CRIC determined to have been seriously affected by the revolt, new home sales dropped by 12% in the week ended July 10 from the week before, then fell 41% in the week ended July 17.

More home buyers are choosing second-hand homes or new ones built by state-owned developers, which are typically in a stronger financial position.

Pressure on the government is building, but hopes for a large real-estate rescue package from Beijing remain unrealized. The Politburo, China’s top policy-making body, made clear recently that local governments are ultimately responsible for fixing the property woes in their markets.

Budget-strapped local authorities have strained to boost property demand, resorting to increasingly creative measures. Dozens of cities have lowered down payments and interest rates. Some are offering outright cash subsidies. Others have announced relief funds for cash-strapped developers or plans to take over troubled projects.

“But the sector won’t stabilize if developers’ liquidity crunch is not relieved,” said Song Hongwei, a research director of Tongce Research Institute, which tracks and analyzes China’s real-estate market.

On Friday, troubled property developer China Evergrande Group sketched out the contours of a plan to restructure its billions of dollars in debt and said its contracted apartment sales in the first six months of the year had fallen about 97% from the same period a year earlier.

Drifts of ground cover plants and wildflowers along the steps of the Sydney Opera House, traffic obscured by meadow-like planting and kangaroos pausing on city streets.

This is the way our cities could be, as imagined by landscape architect Jon Hazelwood, principal at multi-disciplinary architectural firm Hassell. He has been exploring the possibilities of rewilding urban spaces using AI for his Instagram account, Naturopolis_ai with visually arresting outcomes.

“It took me a few weeks to get interesting results,” he said. “I really like the ephemeral nature of the images — you will never see it again and none of those plants are real.

“The AI engine makes an approximation of a grevillea.”

Hazelwood chose some of the most iconic locations in Australia, including the Sydney Opera House and the Harbour Bridge, as well as international cities such as Paris and London, to demonstrate the impact of untamed green spaces on streetscapes, plazas and public space.

He said he hopes to provoke a conversation about the artificial separation between our cities and the broader environment, exploring ways to break down the barriers and promote biodiversity.

“A lot of the planning (for public spaces) is very limited,” Hazelwood said. “There are 110,000 species of plants in Australia and we probably use about 12 in our (public) planting schemes.

“Often it’s for practical reasons because they’re tough and drought tolerant — but it’s not the whole story.”

Hazelwood pointed to the work of UK landscape architect Prof Nigel Dunnett, who has championed wild garden design in urban spaces. He has drawn interest in recent years for his work transforming the brutalist apartment block at the Barbican in London into a meadow-like environment with diverse plantings of grasses and perennials.

Hazelwood said it is this kind of ‘complex nature’ that is required for cities to thrive into the future, but it can be hard to convince planners and developers of the benefits.

“We have been doing a lot of work on how we get complex nature because complexity of species drives biodiversity,” he said.

“But when we try to propose the space the questions are: how are we going to maintain it? Where is the lawn?

“A lot of our work is demonstrating you can get those things and still provide a complex environment.”

At the moment, Hassell together with the University of Melbourne is trialling options at the Hills Showground Metro Station in Sydney, where the remaining ground level planting has been replaced with more than 100 different species of plants and flowers to encourage diversity without the need for regular maintenance. But more needs to be done, Hazelwood said.

“It needs bottom-up change,” he said. ““There is work being done at government level around nature positive cities, but equally there needs to be changes in the range of plants that nurseries grow, and in the way our city landscapes are maintained and managed.”

And there’s no AI option for that.

China Home Sales Plunge in July, as Mortgage Revolt Deters Buyers

Sales fell on the year and from the previous month, ending a budding recovery.

A new AI-driven account by leading landscape architect Jon Hazelwood pushes the boundaries on the role of ‘complex nature’ in the future of our cities