China’s home-price slump persists as buyer demand remains weak
CHINA’S housing market slump persisted in November as prices and sales fell, underscoring the challenge for the authorities as they seek to revive the beleaguered property market.
New-home prices in 70 cities, excluding state-subsidised housing, slid 0.25 per cent last month from October, when they fell 0.37 per cent, National Bureau of Statistics figures showed Thursday (Dec 15). Sales fell 31 per cent from the year before, worsening from a 23 per cent decrease in October, going by Bloomberg calculations based on official data.
The declines came in a month when policymakers unveiled a sweeping plan to rescue the sector, focusing mainly on the supply side by easing financing to developers. Arresting the drop in prices is seen as key to reviving demand from homebuyers and ending an unprecedented real-estate slump that has been curtailing economic growth.
Yang Kewei, chief analyst at property service provider China Real Estate Information Corp (CRIC), said before the figures were released: “The policy ‘adrenaline shot’ hasn’t shown its effect on the home market. As homebuyers take time restoring their confidence in developers, the home market may not bottom out until the second quarter next year.”
November’s transactions were hindered by Covid outbreaks in major cities, prompting restrictions including lockdowns. President Xi Jinping’s administration has since begun a rapid shift away from its zero-tolerance policy, which risks a further spread of the disease even as it allows economic activity to pick up.
Shares of Chinese developers fell on Thursday morning, with a Bloomberg Intelligence gauge dropping more than 4 per cent. The measure is still up about 66 per cent since the end of October, as the government stepped up its efforts to support the industry.
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The slump in home values also persisted in the closely watched secondary market. Existing-home prices dropped 0.44 per cent, easing slightly from 0.47 per cent the month before, the figures showed.
Buyers wary
Bloomberg Intelligence (BI) analysts including Kristy Hung wrote in a note: “Chinese homebuyers could continue to stay on the sidelines in early 2023 as the downtrend of new-home prices is unlikely to be turned around in the coming months.”
In manufacturing hub Guangzhou, which enforced snap lockdowns in November, home sales plunged 67 per cent from the year before, CRIC data showed. In 30 major cities tracked by CRIC, only 26 per cent of projects offered were successfully sold.
Property investment dropped 20 per cent in November from the year before, the steepest decline since at least 2013, going by Bloomberg calculations based on the government’s figures.
Slow improvements in developers’ contract sales will likely remain a drag on their liquidity, despite a short-term boost via support from banks and improved access to bond sales, BI’s Hung estimated. BLOOMBERG
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