Shares and bonds of property giant Country Garden Holdings fell sharply over the past week in the wake of media reports that it had scrapped a planned equity placement—which would have been a rare ray of light for the cash-strapped sector. Country Garden now says there is no definitive agreement about the proposed placement, and it is not considering the transaction at this stage. The company’s dollar-denominated bonds maturing in January 2024 are trading at 25% of their notional value, compared with 81% as recently as mid-June.

Hopes of more easing measures briefly lifted Chinese property stocks last month—but reality quickly set in again. Contracted sales at the country’s top 100 developers plunged 33% from a year earlier in July, according to China Real Estate Information. In the first seven months combined, sales for those developers have now fallen 5% year over year, wiping out all the progress notched at the beginning of the year immediately after China abandoned its strict pandemic control policies. Country Garden’s contracted sales in July were down a vertigo-inducing 60% year on year.

Plunging sales translate into less cash to repay liabilities and finish projects. Country Garden has nearly $2 billion of bonds that will come due or be eligible for early redemption this year. The company had been considered one of the stronger private developers still left standing. Yet sluggish housing markets mean no one—especially among private developers—is really safe.

Moreover, Beijing’s latest moves to support the sector—including making it easier to buy an apartment—don’t seem likely to help much. The fact that even the biggest developers can still run into trouble, nearly two years after Evergrande’s struggles first reached a fever pitch, presumably gives potential home buyers little confidence.

The bitter truth is that there is probably no easy way to quickly turn around the market without igniting another property bubble.

Speculative demand for housing—in the form of second and third, often unrented homes—supported the market for years, helping paper over China’s weak demographics. But the protracted downturn and the government’s hands-off approach appear to have seriously undermined the assumption that housing prices will keep going up endlessly, over the long run.

Goldman Sachs says China’s urban housing demand will fall to 11 million units this year, from 18 million units in 2017. The country’s developers built around 13 million units a year on average over the past decade. And the bank says Chinese developers have around $9 trillion of inventories—including raw land and uncompleted projects—equivalent to around 4.8 years of estimated contracted sales this year.

The housing boom was a wild ride for Chinese property developers, but the hangover will be long—and perhaps has yet to reach its most painful point.

Write to Jacky Wong at jacky.wong@wsj.com