China property pain worsens with sales slump, record Vanke loss
THE world’s second-largest economy has yet to find a floor for its slumping property market, as new home sales reversed into a slide and China Vanke reported a record loss.
After a brief period of stabilising, China saw the value of new home sales tank 11 per cent in March. State-backed Vanke reported a record 49.5 billion yuan (S$9.1 billion) loss last year, its first full-year loss since 1991.
Weak domestic demand and a fragile job market continue to weigh on the country’s property sector, now in its fourth year of decline.
While government support late last year brought some buyers back in the second-hand housing market, people remain wary about developers’ ability to finish projects on time, denting sales at firms including Vanke.
“Vanke’s cash flow pressure remains high,” Morgan Stanley analysts led by Stephen Cheung wrote in a research note on Mar 31. “While management sees incremental help from financial institutions, with such cash burn and large upcoming debt maturity, Vanke may face more challenges covering its debts.”
Vanke’s shares edged lower in Hong Kong on Tuesday (Apr 1) morning, falling 0.54 per cent, compared with a small rise in the Hang Seng Index.
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The value of new home sales from the 100 largest property companies fell to 318 billion yuan from a year earlier, according to preliminary data from the China Real Estate Information Corp. That follows a 1.2 per cent gain in February.
China’s home prices also accelerated their dip in February, falling 0.14 per cent from the previous month. The metrics raise questions on when the real estate market can bottom out.
Policymakers are trying to contain the troubles at a time when deflationary pressure and a trade war are adding to the economic gloom.
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John Lam, head of China and Hong Kong property research at UBS Group, said last month that home prices can stabilise by early 2026 for the country, led by a revival in top-tier cities.
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