China's property market has endured a five-year downward spiral, with real estate values plummeting and developers on the brink of collapse. China Evergrande Group delisted from Hong Kong in August 2025, making shares effectively worthless after defaulting on over $300 billion in 2021. Sunac China Holdings and Country Garden Holdings also defaulted in 2022 and 2023 respectively.
Beijing has announced mortgage subsidies and looser homebuying rules for non-residents in major cities to stabilize the sector. The slump threatens financial stability, as sinking property values push millions of mortgages underwater, increasing lender risk. In 1998, China created a nationwide housing market, rising from 33% to 67% urbanization, with 480 million people moving to cities.
The sector peaked at $52 trillion in 2019, about twice the US market size. The boom was fueled by debt, with developers relying on pre-sales and foreign investment. In 2020, the government imposed the "three red lines" debt rules, sparking a cash crunch exacerbated by Covid-19 construction suspensions.
Evergrande's collapse triggered a broader crisis, forcing banks to confront underwater mortgages and threatening the financial system.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing