China’s state is eating the private property market

At an upmarket housing development in Wuhan, sales agents want to make clear that their state-owned firm has severed all its ties to the private sector. The firm had at first partnered with Sunac, a private developer, until it defaulted in 2022. A saleswoman explains that the firm’s owner also controls the city’s waterworks and electricity provider. If this type of firm collapses, she says with a grin, “then the whole country has no hope”.

More than three years into China’s property crisis, the biggest private builders are folding under the strain of enormous debts. New-home sales in 30 large cities fell by 47% in March, year on year. Revenues for the 100 biggest developers were down 46% in the same month. Housing investment dropped to 8.4trn yuan ($1.2trn), a quarter below its peak in 2021. Although millions of families are waiting for developers to finish building their flats, it would take 3.6 years to sell China’s glut of inventory, including homes still under construction, reckon analysts at ANZ, a bank.