China Grapples with Housing Crisis, Property Stocks Rally 23% Amid Broad Rescue Package

May 19, 2024, 10:15 PM

China is grappling with a severe housing market crisis, marked by an enormous glut of unsold homes comparable to the total number of homes in California and New York combined. Beijing is attempting to address the issue with a broad rescue package aimed at propping up the housing sector and boosting confidence ahead of the third plenum. However, analysts caution that the measures may be insufficient to end the crisis, and investors should proceed with caution. Major property firms like Vanke are struggling, with the company selling assets to pay off mounting debts and real estate companies collectively defaulting on $124 billion of dollar debt. The unsold housing inventory is at an eight-year high. Despite these efforts, the economic contribution of real estate to China's economy could drop significantly. The stock market has responded positively, with Chinese property stocks experiencing a significant rally over the past four weeks, with a 23% increase, marking the best week in approximately 16 months. Foreign buyers swooped in to purchase Chinese stocks following the announcement of the measures.