Lukewarm China holiday home sales underscore economic woes
TEPID data on China home sales during the key vacation season raised doubts over whether Beijing’s steps to prop up the property market are ample to revive the sector this year.
In the new-home market, daily sales during the eight-day Golden Week holiday declined 17 per cent from last year, according to data on 35 major cities tracked by China Index Holdings. Daily sales of existing properties slid 8 per cent over the period, separate data by China Real Estate Information Corporation’s (CRIC) tally on eight major cities showed.
“The home market was generally muted during the holiday,” said Yang Kewei, a Shanghai-based analyst at CRIC. “Except for the few top-tier cities where home markets remained resilient, the majority of other cities were rather lacklustre.”
The subdued sales underscore China’s struggle to arrest a record housing market slump that is stifling economic growth and worsening a debt crisis among developers. Workers returned on Monday (Oct 9) after the holiday period that usually marks the peak of the industry’s September-October busy season. Embattled developers had counted on it to spark a long-awaited sales revival.
It also signals that the mild recovery in September triggered by an easing of mortgage restrictions at the end of August may have lost momentum. The value of new-home sales among the 100 biggest real estate companies gained 18 per cent in September from August, mostly due to a spurt of sales at the start of that month.
Yet sales in the eight-day holiday, mostly in early October, slumped 31 per cent by the daily average from September, according to CRIC data tracking preliminary new-home sales in 22 major cities. Existing-home sales showed a steeper plunge, down 84 per cent from the September average.
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Part of the reason lies in China’s tourism surge, as residents were keen to travel and spend in the first long holiday after the post-Covid shutdowns, according to Lu Qilin, research director at property agency Anjuke. The number of people travelling over the holidays surged 71 per cent from a year earlier, the country’s tourism ministry said.
Delaying purchases
Agents said many customers were travelling and, at the same time, postponing housing transactions, watching out for further easing.
Another reason is the “bottlenecks” of home-buying demand after the spurt of sales last month, Lu said. Anjuke’s indexes taking the temperature of online home viewing suggest buyer interest has ebbed across the country.
China is likely to introduce more measures to support the housing market over the next few quarters, including easing restrictions on home purchases and resales in more tier-1 and tier-2 cities, Goldman Sachs Group analysts wrote in a report on Oct 8.
“A housing recovery will take longer than in previous down cycles,” said Chen Wenjing, associate research director at China Index Holdings. “If more easing measures can be rolled out in the near future, the home market will probably bottom out in the first half of next year.”
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