Cover Story: How China’s Housing Market Landed in the Deep Freeze

On Oct. 7, dozens of homeowners gathered at the sales office of a new residential development in Nanyang demanding refunds. The value of their homes depreciated at least 30% in less than a year since purchase. The average price of housing in a neighboring project by the same developer dropped more than 40%.

Nanyang, a city of nearly 10 million people in central China’s Henan province, is a microcosm of the real estate market in China’s third- and fourth-tier cities. In the past few years, with large inflows of migrants from rural areas into smaller cities like Nanyang, developers such as China Evergrande Group and Country Garden Holdings Co. Ltd. rushed in to build housing.