Evergrande group received a liquidation order on Monday after failing to convince a Hong Kong court that it had a working restructuring plan.

"(Considering) the obvious lack of progress on the part of the company in putting forward a viable restructuring proposal... I consider that it is appropriate for the court to make a winding-up order against the company and I so order," Judge Linda Chan said. 

The company can still appeal against the order. The provisional liquidator of the company, Eddie Middleton and Tiffany Wong, who are managing directors of global restructuring and consultancy firm Alvarez & Marsal, was named at a 2:30 p.m. hearing on Monday.

Shortly after the court order, shares of the Chinese property developer plummeted over 20 percent in Hong Kong. 

China's property crisis came squarely into view in mid-2021 when the China Evergrande Group, at the time China's largest property developer, began to default on its liabilities. While these developments were adverse for China's growth in the short run, they weeded out bad risks, a necessary step for a sustainable property market to emerge, said Nicholas R. Lardym, senior fellow at the Peterson Institute for International Economics, in a recent article.  

The article also noted that in 2023 that completions of residential property in China rose by 17 percent, totaling nearly 725 million square meters, and outstripped the pace of new residential starts for the first time ever.  

Nicholas R. Lardym said that if this trend continues, it will help restore confidence in the property market, leading to a more sustainable pace of development.

Housing market gets policy support

Recently, China's central bank, financial regulator and Ministry of Housing and Urban-Rural Development all vowed support for targeted and reasonable financing of real estate firms, in a bid to optimize policies for both supply and demand.  

Cities will implement and adjust policy tools in the real estate sector based on local conditions, China's Ministry of Housing and Urban-Rural Development announced in a meeting last Friday.  

The meeting was held following the National Financial Regulatory Administration announcement to step up efforts to support the real estate sector and meet the reasonable financing demand of developer companies.

With the gradual implementation of financial policies, the funding pressure on enterprises is expected to be further alleviated.

On the demand side, China's major southern city of Guangzhou recently fully relaxed home purchase limits for some people and said it would increase the affordable housing supply, in a move to support the local property market.

With all these positive signals, joint forces are expected to form, bringing market stabilization and recovery both in new home prices and the second-hand housing market.

China's property market is not as bad as people think, noted Gao Shanwen, CF40 Academic Committee Member and chief economist at SDIC Securities.  

Price adjustment in the second-hand housing market may have been basically completed by 2023, indicating that China's property market is experiencing a brief bubble correction rather than a bubble bursting, as explained in a recent press conference of CF40.  

Gao also said that the price adjustment of new homes has been completed greater than or equal to half.  

Looking ahead, the economist also analyzed if new home prices continue will have a reasonable range of corrections like the prices of second-hand houses, where the entire market adjustment can conclude and sales volume will come back.