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The property market is a significant contributor to China's economy but is currently in deep trouble, with many observers saying the government should intervene quickly to prevent a major collapse. In October, existing home prices nosedived, experiencing their biggest fall for nearly a decade, and new property loans fell for the first time.

Beijing's interventions in the property market to date have been more focused on helping people to buy more, but with many developers in serious financial strife and unable to finish projects buyers have already been paid for, the situation could quickly spiral out of control.

Also, one of the biggest real estate developers, Country Garden, recently failed to repay a USD bond and their workers.

There are currently an estimated 20 million properties that have been sold but unbuilt. It is typical for properties in China to be sold before they are constructed, but with such a backlog, many buyers have decided not to continue paying their mortgages.

Chinese officials are attempting to help stricken developers rely less on debt and ease the inflated prices that have made it almost impossible for young people to buy homes, especially in big cities.

The property sector and associated service providers contribute nearly one-quarter of China's GDP but have shrunk by 3% recently. Since last November, the Chinese government has been trying to find ways to make it easier for developers to access cash and reduce mortgage rates.

Latest indications are that matters are only getting worse in the Chinese real estate sector, with the latest figures showing a drop in average home prices by 0.6% in seventy of the biggest cities. This is especially concerning as these cities are where people usually move to for better employment opportunities.

Many still believe that the worst is yet to come for China's real estate sector, and it has yet to bottom out, with people overly optimistic about the government's ability to help.

Officials have been indicating that they still want to do more, with The People's Bank of China's meeting last week to discuss the dire situation and explore what actions can be taken to build more affordable housing.

Market analysts believe that the PBOC meeting should help keep credit flowing for now, and extended support for real estate financing and solving debt issues should help prevent more severe problems, as the broader economy still needs a lift.

The stock market reacted positively to the news from the PBOC meeting, with the stock prices of leading developers, including Sunac, rising by over 5% in Hong Kong.