LONDON (Bloomberg) - Chinese homebuilders have lost nearly $90 billion worth of stocks and bonds this year, as China’s housing boom shows signs of ending.
A bursting of the housing bubble in China coupled with an impending debt crisis have added more strain to homebuilders desperate to rebound from record-lows in stock levels.
Beijing has signaled a more favorable attitude toward aiding homeowners over builders in its route to recovery and attempts to stabilize the market.
Builders have been battling a cash crunch this year due to government efforts to limit debt expansion. At the same time, home prices have steadily fallen which has threatened the future of the industry and the financial stability of the sector.
And help may not be on the way any time soon. Chinese authorities are busy aiding homeowners still waiting on the completion of housing projects, while dealing with consumers shunning mortgage payments en mass.
Meanwhile, builders are feeling more pain in the previously reliable bond market. Borrowers have defaulted on a record $28.8 billion on offshore bonds, according to metrics from Bloomberg. In July, the median dollar-bond price for builders was 16 cents compared to 40 cents in March, according to Bloomberg Intelligence.
Population and economic growth is also slowing in China, likely signalling a downturn in the near future. As Beijing pivots away from homebuilding as means for speculation, the housing market in China is likely in the middle of a makeover that favors consumers.