China's property crisis grinds on after Evergrande sentencing

China's property market crisis, exacerbated by the sentencing of billionaire Hui Ka Yan to life in prison, continues to weigh heavily on the country's economy. The property sector, once a major driver of growth, entered its sixth year of decline in June 2023. Millions of partially completed properties sit idle, with land sales plummeting and second-hand home prices in smaller cities dropping almost a quarter from 2020 levels.

Despite the economy growing 4.3% in the three months to June 2023, the slowest in over three years, the property crisis remains a significant drag on growth, particularly for millions of households struggling to afford homes. Analysts say there is no clear end in sight, with estimates suggesting it could take 18 months to clear home inventory and 40% further drops in home prices to reach equilibrium.

President Xi Jinping has sought to redirect bank credit and state support away from real estate to strategic tech industries, but those sectors remain too small to offset the housing slump. With banks largely refusing to lend to private developers, the property sector is increasingly subject to state oversight.