A ghost city in China
(ZEROHEDGE) – It is like a cheesy horror movie: Every time there’s a glimpse of hope for a narrow escape, Chinese real estate developers are pulled back into the abyss. The turmoil at the state-backed Sino-Ocean Group underscores the renewed tensions in the market and that the current piecemeal policy easing isn’t working.
Markets can sometimes defy “common sense.” Despite skyrocketing mortgage rates, the US housing market, one of the most interest-rate sensitive sectors, somehow has roared back to life. Some Fed officials noted that “the effect of high interest rates on the housing sector appeared to be bottoming out,” according to the minutes from the June meeting released Wednesday.
In China, the opposite is true. Even with ever lower interest rates, the slump in the property market resumed after the pent-up demand following the end of Covid Zero faded. Sales among the 100 largest developers tumbled 28% in June from a year earlier, when Covid restrictions were still in place, according to China Real Estate Information Corp. Bloomberg Intelligence analyst Kristy Hung expects a further decline of more than 10% for the remainder of the year.
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