Families in China on path to buying homes again: survey

THE number of Chinese households that decided against buying a home soared in the fourth quarter of 2022, a private survey showed. This came as lockdowns and a surge in Covid infections sapped buyer sentiment, and as property foreclosures soared amid a slowing economy.

But the survey, conducted by a think tank under Ant Group and the Southwestern University of Finance and Economics (SUFE), showed that more households were considering buying a home or investing in other assets in the coming three months.

Stabilising the crisis-hit property sector will be a key challenge for Chinese policymakers this year as they try to kick-start an economic recovery. A key concern is how quickly people will start spending again, after the government abruptly dismantled its tough Covid restrictions last December.

The survey of 34,000 households, published on Wednesday (Feb 23), focused on changes in Chinese household wealth. It showed that the number of families opting to stay on the sidelines for property in the quarter ended December 2022 rose to 27.2 per cent of respondents. This was up from 20.1 per cent the quarter before.

The survey also found that 16.6 per cent of families had plans to buy a home in the coming three months, up from 7 per cent in the July-October quarter. Respondents’ willingness to allocate money to domestic stocks, funds, and overseas asset classes also increased.

China’s real estate sector, once a key driver of the world’s second-largest economy, fell into a deep slump in 2022 as debt-ridden developers failed to finish stalled projects, and some buyers boycotted mortgage payments. Property investment and sales fell sharply as a result, weighing on home prices.

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A separate survey by China Index Academy (CIA) showed that foreclosed properties reached 606,000 units last year, up 35.7 per cent from 2021. Meanwhile, the number of such properties finding buyers at auctions slumped by 14.9 per cent year on year. CIA is one of the country’s largest independent real estate research firms.

The firm also found that cities with high numbers of foreclosures were mostly in central and western China, as well as the prosperous Yangtze River Delta and Pearl River Delta regions.

A tentative revival was seen in the property sector in January, with home prices rising for the first time in a year. This was boosted by the government’s aggressive support measures late last year, its U-turn on the zero-Covid policy, as well as lower mortgage rates.

But analysts expect a sustainable recovery in the sector will kick in only towards the second half of this year.

The Ant Group-SUFE survey found that the overall debt of Chinese families – and all types of debt – increased significantly in the fourth quarter, and were at higher levels than in the year-earlier period.

The survey also showed that demand for consumer loans increased in the fourth quarter, although low interest rates on consumer loans led many homebuyers to use the funds for advance payments on existing mortgages. REUTERS