A nice apartment and the promise of a good marriage: that’s what Gao Zhuang hoped for in 2019 when he invested almost all of his savings in a new home he had acquired for his son in Zhengzhou, central China.
Four years later, the construction site is at a standstill, so this 49-year-old worker has made a radical decision: he no longer repays his mortgage.
“The main victim is my son,” sighs Mr. Gao, who asked for his surname to be changed to avoid reprisals.
“How is he going to be able to get married without his own place?” he asks. The apartment, which costs 1.2 million yuan (150,000 euros), should have been completed in two years in Zhenghou, a city of 12.6 million inhabitants.
Like him, many buyers have lost patience, while the real estate crisis has frozen construction sites, developers lacking funds to complete the work.
Having few possible legal remedies, they opted to go on strike for monthly drafts, a phenomenon which quickly snowballed across the country last summer and which inconveniences the Chinese government.
Problems in real estate, a key sector for the world’s second largest economy, suddenly surfaced in 2020, when the authorities said a stop to excessive borrowing and speculation.
Deprived of easy access to credit, developers were quickly overwhelmed with debt as housing demand dried up amid the coronavirus pandemic.
The real estate crisis made headlines for its magnitude, especially when the sector giant Evergrande narrowly avoided bankruptcy and then announced a major restructuring plan.
The regional developer responsible for building Mr. Gao’s accommodation, Henan Jin’en Real Estate, is not listed on the stock exchange, which makes it impossible to know its true financial situation.
The group did not respond to requests from AFP.
In the subdivision of which Mr. Gao’s apartment was to be part, a hundred dwellings are unfinished… and many buyers are complaining about the quality of what has already been built.
During a visit in June, AFP journalists found that some exterior walls were crumbling and that others, from which hanging electrical wires, had holes.
Some workers were certainly present on the site, digging trenches or stacking cinder blocks, while the noise of machines at work echoed in several constructions.
But some buyers say it’s a set-up and that the developer has hired a few people to justify a possible government bailout.
One of them believes that the local authorities are unable to force him to complete the work.
And in the end, “it’s the ordinary people who suffer the most”, says this man in his forties who looks at the concrete structure of an apartment under construction.
“I don’t blame the promoter, I blame the government,” he adds. “Some people here still believe in our government, but I don’t think it deserves our trust.”
Mr. Gao stopped paying his monthly payment of 5,000 yuan (about 625 euros) in January, joining the boycott led by other buyers of the subdivision.
He tried, in vain, to obtain compensation for the numerous delays on the site.
“Their attitude was to say if you don’t like it, sue us,” Gao said indignantly to AFP.
“But they know that in China, people like us rarely have the means to sue.”
Others are simply discouraged.
“There’s no point in being angry, because there’s nothing I can do,” admits Mr. Wang, a 24-year-old buyer speaking under a pseudonym.
Manager of an online store, he had invested in the construction of an apartment in the rich city of Ningbo (9.6 million inhabitants), for 690,000 yuan (86,000 euros).
He signed in 2021, but the site was stopped a few months later.
On the spot, AFP discovered piles of earth, dusty construction machinery, a dozen workers and a building still far from being finished.
Mr. Wang says he has “no confidence” in the last promise he was given that his apartment would be ready by the end of August.
“After that, I will never buy a house that is not already finished,” he says.
“And I won’t believe anything the government and others say.”
For the Chinese authorities, the subject has become a real headache.
Recently, they have tried to give a boost to the sector, by reducing mortgage rates, cutting red tape and offering more loans to developers.
But analysts warn that room for maneuver is being squeezed as over-indebtedness threatens state-owned developers and the finances of increasingly large cities.
The prognosis for real estate in China is “disastrous”, estimated in June, in a note, the experts of the Japanese bank Nomura.
The issue is sensitive for the government, which has made social stability a priority. In recent months, authorities in several regions have done everything to silence buyers’ complaints about their unfinished homes, according to several of them contacted by AFP.
Both Mr. Gao and Mr. Wang say they were contacted by official agents to dissuade them from signing a petition to the government or speaking to the media.
Many others say they have received calls from the police and fear they have been spied on the private chats they participate in on social media.
An administrator of one of these discussions, who had initially agreed to speak to AFP, abruptly changed his mind. “I have nothing to say on the subject”, he justified, “the State controls this very closely now”.
22/07/2023 18:39:52 – Zhengzhou (China) (AFP) – © 2023 AFP
