A man works at a construction site for a residential skyscraper in Shanghai on November 29, 2016. The risk could send shock waves through the world’s second-largest economy.
Johannes Eisler/AFP via Getty Images
Analysts say China’s property stimulus measures have given the market a modest boost but won’t be enough to turn around the struggling industry.
Home sales increased in some cities during China’s week-long holiday as stimulus measures boosted homebuyer sentiment, A report by the research team of the China Index Academy shows.
Compared with the same period last year, Beijing’s daily average sales area (calculated in terms of construction area) increased by 81%. Last year’s Golden Week holiday was between September 29th and October 6th.
However, according to the report’s survey of 25 major cities in China, the average daily transaction area of ​​new homes nationwide fell by 27% compared with the same period last year.
In addition to Beijing, sales in other first-tier cities Shanghai, Guangzhou and Shenzhen dropped by 61%, 59% and 57% respectively. Sales in most other cities surveyed by the report also shrank to varying degrees compared with the same period last year.
Home sales during the Golden Week holiday period, traditionally a peak period for big-ticket purchases, have been on a multi-year downward trend since 2021, the report said.
The report shows that the average daily sales volume this year is 107,000 square meters, compared with 177,000 square meters in 2021, 158,000 square meters in 2022 and 145,000 square meters in 2023.
William Wu, an analyst at Daiwa Capital Markets, said the government’s recent steps may boost market confidence, but only temporarily. “In the long run, without a stronger boost, The market is unlikely to stabilize.
“More attention should be paid to how sales data changes over a longer period of time to prove the effectiveness of policies,” Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co., told CNBC.
Home sales rebounded 23% this year compared with last year’s six-day October holiday, the CIA report said, adding that homebuying orders are typically larger at the end of each month.
“October sales data are expected to show a more significant improvement,” according to a translation of CNBC’s Chinese report, which noted there were some delays in data retrieval.
crisis of confidence
Major cities in China moved to launch a series of easing measures to boost homebuyer sentiment federal steps Examples include lowering mortgage rates on existing loans, lowering average down payment ratios across all housing categories, and increasing home purchase quotas per household.
Experts say the industry needs to do more to deal with cash-strapped property developers, large inventories of new homes and unfinished projects.
Kenneth Ho, chief Asia credit strategist at Goldman Sachs, said on CNBC’s “Squawk Box Asia” program on Wednesday that China needs to introduce more policies to solve the “excess inventory” problem to boost the industry. But “we don’t see a huge effort from (the government) on this,” he said.
Zhang Zhiwei, chief economist at Pindian Asset Management, said that although home sales in some first-tier cities rebounded during the holidays, they accounted for a small share of the national real estate market. “They don’t really change the overall outlook for the real estate industry,” he said, adding that it’s unclear when the overall industry will stabilize.
“The confidence crisis remains a key obstacle,” Daiwa’s Wu said, adding that the market expected Beijing to launch fiscal stimulus measures to support local governments’ massive home purchases and “stop house prices from freefall.”
Real estate once contributed more than a quarter of China’s GDP but has since slumped Beijing launches all-out crackdown The industry’s high debt levels in 2020 led to a large number of cash-strapped property developers defaulting on their debts and housing prices plummeting.
