China home sales slump deepens after easing in top cities
The value of new-home sales by the 100 largest property companies stands at 253 billion yuan
[BEIJING] China’s new-home sales extended a slump in October, despite recent easing measures introduced by major cities to revive the struggling property market.
The value of new-home sales from the 100 largest property companies stood at 253 billion yuan (S$46.3 billion), preliminary data from China Real Estate Information Corp on Friday (Oct 31) showed. That represents a 41.9 per cent drop from a year earlier, according to data compiled by Bloomberg. It also snaps a brief stabilisation in sales seen a month earlier.
China’s housing slump has dragged on for more than four years, with sales falling further since the second quarter. Mild easing of buying restrictions in some of the biggest cities failed to revive sentiment immediately as the country’s labour market is souring, hurting demand for home shopping.
“Beijing is likely to become more committed to supporting domestic demand,” Serena Zhou, senior China economist at Mizuho Securities Asia, wrote in recent note. “Policy initiatives may include central government-led destocking in the property market.”
Calls for further policy support for the residential market have grown as home-price declines accelerated, suggesting developers still rely on price cuts to encourage sales.
The country’s new home sales by area may decline another 15 per cent from their current level before the sector stabilises, Lulu Shi, a director at Fitch, projected earlier this week. Transactions by value may drop another 7 to 10 per cent next year, she added.
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A group of academics led by an adviser to the country’s central bank last month urged Beijing to stabilise important traditional sectors including real estate, including using fiscal support, echoing calls of other prominent economists.
However, the prospect of a strong easing package is growing dim after Asia’s largest economy expanded faster than expected in the third quarter, laying a foundation for achieving policymakers’ full-year expansion goal.
Real estate policies could “focus on risk prevention through market forces, execution of local easing and urban renewals,” Citigroup analysts led by Griffin Chan wrote in an October report. But central government stimulus is unlikely, the report said. BLOOMBERG
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