Real estate firms accepting watermelons, wheat as payment in China; Here's why

Amid the deep recession in the property market in China, the real estate companies have now started accepting payments for homes in watermelons and other agricultural produce, Global Times reported.

According to the Chinese daily, realtors in tier-3 and 4th cities have launched a campaign encouraging home buyers to pay part of their own payment with wheat and garlic, in a bid to attract farmers to purchase newly built homes.

The report cited a developer from the city of Nanjing who would allow home buyers to pay for their homes using watermelon at a rate of 20 yuan ( ₹236) per kilograms.

The promotional campaign by real estate developers read, "Property developer would allow home buyers to make a maximum payment of 5,000 kilograms of watermelon, valued at 100,000 yuan, noting the purpose of the promotion is to support local watermelon farmers".

According to a report by Bloomberg news, China is stepping up efforts to salvage the residential property market as consumer and business confidence has been battered by lockdowns.

China has taken several steps to boost the real estate sector such as the Chinese banks cut a key interest rate for long-term loans by a record amount, a move that would reduce mortgage costs and may help counter weak loan demand. The People’s Bank of China effectively cut the minimum interest rate for first-home buyers’ new mortgages, enabling them to borrow money at an interest rate as low as 4.4%, down from 4.6% previously.

The property market was one of the few cherished destinations for household savings. The developers and homebuyers were also willing to take loans from the banks but these good days for China ended last year.

China's household debt touched over $10 trillion. And around 27% of bank loans in China are tied to real estate, reported a think tank, Policy Research Group (POREG).

This industry was known to be the biggest job creator in China but now it is termed as "Lehman moment", in comparison to the 2008 bankruptcy of Lehman Brothers, which was a trigger for the global financial crisis. More so, when the number of empty homes has crossed the 65 million mark (90 million according to some estimates) - enough to house the population of France, and raised the spectre of a global economy on crutches.