Whether developers or other businesses, capital flow is one of the guarantees of business. Developers take land to build houses, and the cost is not cash in the company, but bank loans. Once the property price falls and the profit is lower than the repayment amount, the developer who borrowed from the bank may not be able to repay it, which may easily lead to bad debts of the bank. As for whether the house price will be lower than the cost, this is certain. When the market is bad, some developers will sell houses below the cost in order to ensure the continuity of the capital chain.
Relationship between government and business. The government controls banks and real estate. In China, the government directly controls the major domestic banks, while some individuals set foot in real estate. The government sells land to developers, and developers buy land from banks to build houses, and then sell them to property buyers, earning profits (profits envied by everyone), repaying bank loans and paying dividends to those who control government machines. Whether developers or other businesses, capital flow is one of the guarantees of business. Developers take land to build houses, and the cost is not cash in the company, but bank loans. Once the property price falls and the profit is lower than the repayment amount, the developer who borrowed from the bank may not be able to repay it, which may easily lead to bad debts of the bank. As for whether the house price will be lower than the cost, this is certain. When the market is bad, some developers will sell houses below the cost in order to ensure the continuity of the capital chain. In China, the government directly controls the country's major banks, while some individuals set up real estate. The government sells land to developers, who borrow money from banks to buy land and build houses, and then sell it to property buyers to make a profit.