Ms. Liu was losing patience. Construction of her apartment was already more than a year behind schedule. In the middle of a huge construction site in mid-September, she scanned her future home, halfway up a 30-story tower, still in rough concrete. "Look: There are only two workers for a building this big, you'd think they were just making up the numbers," she said, pointing to the silhouettes working on a platform suspended from the facade.
The real estate market was doing well in 2020 when Ms. Liu (to preserve her anonymity, she did not wish to give her first name) bought an apartment off a plan of this residential project located some 30 kilometers from the center of Xi'an, the metropolis of Shaanxi Province in central China. The price was 1.06 million yuan (€135,000). For her and her husband, homeownership was a way of settling down in their adopted city and ensuring their children's education, thanks to the three elementary schools and one secondary school promised by the developer of this huge project, which would include 17,000 apartments once completed.
Today, the family – who had hoped to move in this summer – have to pay not only their mortgage, but also the rent for their current home, a total of 8,000 yuan in charges. "And then there's 500 yuan in gas to take my sons to school," said a worried Ms. Liu. The problem: Her husband, who used to earn a good living as a salesman of bathroom fittings, has also been hit by the real estate crisis: "Today, he barely earns 20,000 yuan [€2,500, or three times the average income in Xi'an]. Once everything's paid for, the four of us are barely left with enough to live on. Next year, we'll also have to pay for the older child to go to high school... I don't know how we'll manage," she exclaimed.
Month after month, China's real estate crisis is worsening, dragging most sectors of the economy down with it. In August, real estate investment fell by 19.1% year-on-year, the 18th consecutive month of decline. One of the economy's main engines is coming to a halt: until 2020, real estate and construction provided around 25% of China's growth, and even more if furniture and raw materials were added.
As a result, despite the abandonment of the zero-Covid policy in 2022 and the end of the lockdown, the recovery, expected in early 2023, has failed to materialize. Growth was limited to 0.8% in the second quarter, exports are falling and the youth unemployment rate is now being kept a secret after hitting a record of 21.3% in June.
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