BEIJING — Chinese real estate defaults have increased so much that Goldman Sachs analysts have shifted to their worst-case scenario for the riskiest part of the market.

Analysts Chakki and Kenneth Ho wrote Friday that 22 high-yield Chinese bond issuers related to property have defaulted or delayed repayment on U.S.-dollar-denominated bonds since January.

The analysts stated, “Given stress pick-ups, we increase our FY22 China Property default rate forecast at 31.6% (from previously 19.0%), which was our old bear case assumption.”

The 15.5% rate of default for Asia-high yield corporations has been increased to 15.5% from 9.3%. This is due to the dominance of Chinese properties in this category. According to the report the forecast was slightly lower than that of last year at 17.8%.

Moody’s estimates that China’s economy is more than 25% dominated by the real estate industry and its related sectors.

Beijing tried to curb speculation on its hot property market. Over the past two years regulators have emphasized reducing dependence on debt by property developers for growth. Some companies have adjustedHowever, others like Evergrande have worried investorsThey are concerned about the debt they owe and what consequences a large-scale default could have.

In a separate report, Goldman analysts stated that “it is unlikely that China Property Hy will see an even wider recovery until the property sales show signs of rebound.”

They stated that they believe more easing is needed before sales of property can rebound, especially with Covid restrictions being in effect in a few cities in China.

The worst Covid epidemic in mainland China in the past two years has occurred in March. This led to travel restrictions in some parts of China and orders for stay-at-home in Shanghai.

With agents and potential buyers unable to view properties — on top of an already weak market — sales have plunged.

According to Goldman’s separate analysis, the daily property transactions volume in 30 cities fell 50% year-on–year in May according to a Monday release.

Chinese officials have cut the benchmark rate and mortgage rates this month. Numerous local governments announced additional measures or reduced their downpayments. make it easier to buy property locally, according to state media.

Larry Hu (chief China economist at Macquarie) stated that central government rates cuts sent a clear signal of policy support to the property market in a Macquarie note on Friday.

He noted that Beijing’s property policies have been so restrictive for two years that the average interest rate on a mortgage has been much higher than what is on a loan. That is something that he described as “highly unusual.”

Hu stated that April would likely be the lowest month for this year’s property sector. According to Hu, the unemployment rate has so risen, and both property demand and credit demand have plummeted, “policymakers cannot help but take action for saving our housing market”.