Chinese policymakers are facing calls to do more to prop up the ailing real estate market after the largest property developer, Country Garden, warned of multibillion-dollar losses and missed bond payments.
The world’s 138th largest company, according to business magazine Fortune, warned last week that due to a “decline in sales in the real estate industry,” it was on course to lose between $6 billion and $7 billion (€5.5 billion and €6.4 billion) in the six months from January to June 2023.
Until recently, Country Garden appeared to have been spared from the real estate downturn that took hold in China during the pandemic when President Xi Jinping’s government placed limits on how much debt property developers could take on.
Over the previous two decades, as the Chinese population grew more wealthy, an unprecedented construction boom caused a quadrupling in real estate prices. Hundreds of millions of people bet that property speculation would be safer for their savings than the country’s volatile stock markets.
Youth unemployment is on the rise in China after the property market collapsed driving down economic growthImage: Xiang Yang/picture-alliance/dpa
Evergrande first, now Country Garden
But after years of high growth, the government’s new debt curbs caused property sales and prices to plummet, hitting one developer, China Evergrande, particularly hard.
The country’s second-largest construction firm, Evergrande had grown used to using investor deposits on future projects to fund current construction. In 2021, Evergrande announced it owed $300 billion and later defaulted on some of its debt, along with many of its peers.
“When the China Evergrande crisis unfolded, people feared that others would follow, but certainly not Country Garden. It was much less leveraged than Evergrande,” Alicia Garcia-Herrero, chief economist for Asia Pacific at the French investment bank NATIXIS, told DW.
“Without a continual increase in prices, the whole real estate model is unsustainable and even a company like Country Garden can’t make it,” the Hong Kong-based Garcia-Herrero added.
Rumors about Country Garden’s troubles have been growing for months. Its shares have fallen by more than 75% since January. On Wednesday, Country Garden’s stock was trading at 0.83 Hong Kong dollars (€0.093, $0.10).
Trust firm misses payments
Adding insult to injury, a major firm in China’s $2.9 trillion trust sector, Zhongrong International Trust, admitted this week it had missed dozens of payments on investment products, making a government intervention more likely.
Trust companies are a vital part of China’s shadow banking system as they pool household savings to invest in real estate, stocks and commodities. They tend to have an outsized exposure to the country’s property sector.
Having already offered some support to developers and incentives for first-time home buyers and upgraders, China’s leaders are “very likely” to bail out Country Garden, Pushan Dutt, an economics professor at Insead business school in Singapore, told DW.
“China has struggled with the problem of imbalanced growth driven by investments with real estate taking the lead for more than a decade,” Dutt said. “Every time they try to address this issue, growth slows down, and they go back to the same solution of bailouts, pushing liquidity, and cutting interest rates.”
Country Garden sold nearly two thirds of properties last year in smaller Chinese citiesImage: Sheldon Cooper/SOPA Images/ZUMA/picture alliance
Bankruptcy would have knock-on effect
As China’s real estate sector contributes as much as 30% of the country’s gross domestic product (GDP), any collapse of Country Garden would have a damaging impact on the entire financial system.
Insead professor Dutt warned of the risk of contagion from not propping up the property market, noting that China could face the same “years of anemic growth” that Japan faced in the early 1990s. He was referring to Japan’s so-called lost decade following a property bubble that saw the average Tokyo home reach 15 times the average annual salary until it burst.
“Arresting the adverse spillovers from property will require significantly larger fiscal stimulus than the authorities have so far entertained,” Gerwin Bell, PGIM fixed income’s lead economist for Asia, told news agency Reuters this week. “We expect the Chinese authorities to soon come to the same conclusion.”
Others, however, are less convinced of direct intervention, including Maggie Hu, assistant professor of real estate and finance at the Chinese University of Hong Kong, who told DW the odds of a Country Garden bailout were “quite low.”
“If it became urgent, policies will be implemented to safeguard the construction of pre-sold properties, ensuring the welfare of homebuyers and the banks involved,” Hu said to DW.
China property market crisis stirs unrest
Chinese ready for lasting property crash
No matter whether and how policymakers intervene, most economists expect the real estate downturn to persist, especially outside of the megacities of Beijing and Shanghai.
Average new home prices in the 35 smallest cities surveyed by the National Bureau of Statistics fell for the 17th straight month in June on a year-on-year basis.
“The detrimental effects [of the crash] will be particularly pronounced in second or third-tier cities,” Hu predicted. “Especially those cities experiencing a declining economy with an aging population and an outflow of population.”
Beijing is keen to avoid a glut of unfinished homes, particularly in smaller cities, where Country Garden has been most active in construction and has an estimated one million outstanding homes.
While the firm promised the masses the chance to achieve “five-star living,” many are about to watch as their dreams go up in smoke.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
