Global Market: China’s property crisis deepens as Evergrande founder gets life sentence

The former billionaire who became a symbol of China’s spectacular property boom and subsequent collapse has been sentenced to life in prison, but the punishment for China Evergrande founder Hui Ka Yan has done little to ease the deepening crisis in the country’s housing market, according to a Reuters report.

Hui was sentenced by a Chinese court last week after being convicted of offences including misuse of funds and bribery. His downfall comes as China’s property sector enters its sixth year of turmoil, weighing on household wealth, domestic consumption and economic growth.

According to Reuters, the sector’s prolonged downturn shows few signs of a decisive recovery. Millions of partially completed homes remain unfinished, while new-home prices in major cities such as Beijing and Shanghai have struggled to regain momentum. Land sales have also continued to fall, while property sales and construction activity have weakened further.


The crisis has become an increasingly important challenge for China’s economy. Housing had for years been a major source of domestic demand and household wealth, but the downturn has sharply reduced both.

Property slump weighs on household wealth

The impact is particularly severe in smaller inland cities, where second-hand home prices have fallen by almost a quarter from 2020 levels. The decline in property values has weakened household confidence and created a major hurdle for consumer spending.

China’s economy expanded 4.3% in the April-June quarter from a year earlier, its slowest pace in more than three years. With domestic demand struggling, the country has increasingly depended on exports to support growth.

Reuters reported that China’s trade surplus has more than doubled since 2019. The surge in exports has intensified trade tensions with the United States and European Union, while also raising concerns that Chinese goods could increasingly displace domestic industries in emerging markets.

The situation has revived comparisons with the so-called “China Shock” that followed the country’s earlier export boom.

No easy solution for the housing crisis

The problems facing China’s property sector are deeply structural. Years of aggressive borrowing and speculative investment left developers with large debt burdens and an oversupply of housing.

Evergrande defaulted on its debt in 2021 and entered liquidation proceedings in 2024. Rival developer Country Garden defaulted in 2023 and has not purchased land since then. China Vanke, another major developer, has sought extensions on some bond repayments and has replaced much of its senior management with executives from state-owned enterprises.

The deterioration has also transformed the structure of the property industry. With many private developers unable to access financing, state-owned companies have become increasingly dominant.

Reuters reported that market participants expect greater government involvement in the sector, with banks showing a strong preference for developers backed by central or local governments.

Government shifts focus to technology

President Xi Jinping’s administration has attempted to redirect credit and government support away from real estate and towards strategic industries such as robotics and semiconductors.

However, analysts cited by Reuters say these emerging sectors remain too small to compensate fully for the drag from the housing downturn.

The uneven distribution of economic gains is also contributing to weak consumption. As property values decline and confidence remains subdued, households have become more reluctant to spend or make large investments in housing.

Recovery could take years

Estimates for when the property market will stabilise vary widely.

Some analysts believe the market could require several more years of falling prices and inventory adjustments before reaching equilibrium. Reuters reported that one estimate suggests housing inventories could take around 18 months to clear, while prices in some areas may need to fall substantially further.

Other analysts are more optimistic, arguing that the worst of the downturn may already have passed. Under this view, the market is more likely to experience a prolonged and gradual correction rather than another sharp deterioration.

That would still leave China facing a lengthy adjustment as developers, banks, households and local governments work through the consequences of years of excessive property investment.

Hui’s sentence reflects wider public frustration

Hui’s life sentence has also become a focal point for public anger over the property crisis. Reuters reported that discussions about his punishment generated hundreds of millions of views on Weibo, with many homeowners and creditors questioning why he was not given a harsher sentence.

For millions of homeowners, the issue extends beyond the fate of a single developer. Falling property values, unfinished housing projects and lost household wealth have made the crisis a deeply personal economic problem.

The experience of homeowners such as those in Shandong, where property values have fallen sharply in some areas, illustrates the broader challenge. As housing becomes less attractive as an investment and household confidence remains weak, a traditional engine of Chinese growth is struggling to regain momentum.

For Beijing, the challenge is therefore no longer simply about rescuing developers. It is about restoring confidence, stabilising household wealth and finding new sources of domestic demand while preventing the property downturn from becoming a longer-lasting drag on economic growth.