China home sales slump deepens despite latest rescue effort, drags down economic growth
Sign up now: Get ST's newsletters delivered to your inbox
The value of new home sales from the 100 biggest real estate companies slumped 19.7 per cent from a year earlier in July.
PHOTO: AFP
Follow topic:
BEIJING – China’s residential real estate slump deepened again in July despite the country’s most forceful efforts yet to support the property market.
The value of new home sales from the 100 biggest real estate companies slumped 19.7 per cent from a year earlier to about 279 billion yuan (S$51.7 billion), faster than the 17 per cent decline in June, according to preliminary data from China Real Estate Information.
Transactions dropped 36.4 per cent from June, after showing a notable increase in April and May.
The accelerating slide underscores how China’s recent rescue package
Buyer sentiment has also been hurt since a twice-a-decade meeting of the ruling Communist Party failed to roll out more forceful support.
Multiple Chinese cities have removed price guidance curbs recently to better reflect market demands. On July 31, Zhengzhou city in central China’s Henan province scrapped the use of guide prices for new homes, letting developers set their own transaction prices for houses. Others, including Shenyang, Lanzhou and Ningde, also removed such guidelines earlier in 2024, according to local media Yicai.
The real estate sector continues to drag down China’s economic growth, which is expected to undershoot the government’s official 5 per cent target in 2024, according to Bloomberg Economics estimates. A Bloomberg gauge of Chinese developer shares declined 21 per cent in 2024.
Meanwhile, it is taking longer to clear housing inventory. The average period for a sample of 50 cities to destock homes increased by 3.9 months to 21.3 months as at the end of May, local media Jiemian reported, citing data from China Index Academy.
In June, two credit ratings firms lowered their forecasts for China’s property market. S&P Global Ratings expects residential sales to drop 15 per cent in 2024, more than the 5 per cent decline it projected earlier. Fitch Ratings cut its annual sales estimate to a decrease of 15 per cent to 20 per cent, worse than an earlier estimate of a 5 per cent to 10 per cent drop.
Cash-strapped developers, many in default for more than a year, are counting on sales to persuade debt holders they will be repaid and to fight off liquidation. BLOOMBERG
