China home sales drop 28% as Covid flare-up adds to risks

CHINA’S home sales slump intensified in October, the latest sign that a recovery in the nation’s property market remains distant.

The 100 biggest real estate developers saw new-home sales drop 28.4 per cent from a year earlier to 556.1 billion yuan (S$107.8 billion) in October, according to preliminary data from China Real Estate Information (CRIC). That plunge widened from a 25.4 per cent slump in September.

China’s housing market remains fragile despite a wave of measures to restore confidence that’s been battered by Covid Zero and a debt crisis among cash-strapped developers. Builders have offered more property projects in the past two months, hoping that the traditionally fast season for sales will help them recoup more cash, CRIC said earlier.

Investors in Chinese developers got another fright on Monday (Oct 31) after Longfor Group Holdings’ billionaire Chairperson Wu Yajun stepped down, triggering a plunge in its shares and bonds. The company has the highest credit rating among private Chinese peers.

Chinese authorities have eased home ownership rules, trimmed interest rates and urged banks to step up lending in a bid to turn around the ailing property market, which remains a drag on the world’s second-largest economy. Hopes for more substantive industry support have dimmed after President Xi Jinping gave little signal of a deeper shift in policies on housing and Covid Zero during the ruling party’s congress.

“The Covid situation remains the key factor for the home market rebound,” said Chen Wenjing, associate research director at China Index Holdings.

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China has reported a surge in cases of the virus in recent days, putting a strain on workers and families. An outbreak in the populous Henan province, the location of a major production plant for Apple’s iPhones, spurred some workers to escape hastily enacted Covid measures on their own. BLOOMBERG