Illustration: Maura Losch/Axios
Homebuyers in China, frustrated by construction delays, have stopped paying their mortgages.
Why it matters: The protest is part of (and now contributing to) China’s deepening housing crisis — an issue that the Fed has warned could impact U.S. and global markets and economies.
State of play: Tens of thousands of people in the country are part of a growing boycott on loans worth as much as 2 trillion yuan, or $297 billion, Bloomberg reports.
- The number of impacted housing projects has risen to more than 300 across 90 cities, up from 100 projects less than a week ago.
Flashback: Home building in the county began to stall last year as real estate developers (most notably China Evergrande) showed financial distress.
- Home prices have fallen 10 months in a row — pressured in part by recent COVID-related lockdowns in the country.
Context: Real estate companies in China can sell homes before they're complete, using mortgages from homeowners who haven't taken possession to finance construction.
- China’s property sector is estimated to account for about 25% of its GDP, according to Bloomberg, with 70% of household wealth stored in property.
- As China is the second largest economy in the world, it’s therefore also a critical driver of global growth.
What to watch: Authorities in China may move to allow homeowners to halt their payments temporarily without penalty in an effort to stop the protests from spreading, according to a Bloomberg report.