China property slump persists in October with falling prices, sales as Covid bites
CHINA’S property market continued its slump in October, with private data showing home prices and sales falling, suggesting lacklustre sentiment and a bleak outlook amid strict Covid curbs that have rattled consumer confidence.
China’s property sector, once a pillar of growth, has slowed sharply in the past year as a result of a government clampdown on excessive borrowing by developers, and a Covid-19-induced economic slump.
Prices in 100 cities dropped for a fourth month in October, falling 0.01 per cent month-on-month after a decline of 0.02 per cent in September, according to a survey on Tuesday by China Index Academy (CIA), one of the country’s largest independent real estate research firms.
Property sales by floor area in 100 cities fell about 20 per cent year-on-year in October, according to a separate statement by the academy.
CIA analyst Chen Wenjing said the property sector recovery depends on Covid containment measures and the strength of policies.
Any rebound in the real estate market is expected to be delayed if the country sticks with strict Covid restrictions to quell the repeated coronavirus outbreaks, Chen said. Such curbs are expected to stay in place for some time after the Communist Party Congress last month.
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Despite more than 230 stimulus policies introduced by 160 local governments in September and October, including subsidies, easing of purchase restrictions and decreasing down payment requirements, the property slump has widened from small cities with a net outflow of population to major cities.
Last month, new home prices in Shanghai and Shenzhen fell 0.05 per cent and 0.32 per cent in monthly terms, respectively.
Home sales by floor area in Shanghai and Guangzhou fell 35 per cent and 26 per cent in annual terms, respectively.
Cash-strapped developers recently suspended debt repayments or sought offshore bond payment extensions, adding to the property woes amid already fragile demand.
For the January-October period, 15 major real estate firms, including Greentown China and Longfor Group, achieved 58.8 per cent of their sales targets set for 2022, China Index Academy also said.
That was lower than the 78.5 per cent completion rate by the firms during the same period last year.
Although more and more developers are not increasing their sales targets, they are under pressure to meet their annual sales targets, said China Index Academy.
“Wait-and-see sentiment in home buyers currently remains strong, with Covid flare-ups in many areas further dragging down the pace of market recovery and the previous policies have yet to take effect significantly,” CIA’s Chen said. REUTERS
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