China’s home sales drop most in a year as slowdown worsens

BEIJING – China’s home sales tumbled the most in a year in July, underscoring why policymakers are seeking to address a

property slowdown that is weighing on the economic recovery.

The value of new home sales by the 100 biggest real estate developers fell 33.1 per cent from a year earlier to 350.4 billion yuan (S$65.6 billion), according to preliminary data from China Real Estate Information Corp.

The drop was the second in a row, after four months of gains. Sales slid 33.5 per cent month on month. 

The slump in transactions is a blow to developers, who need cash to alleviate a multi-year credit crisis that is showing no sign of easing.

Country Garden Holdings, which faces US$2.9 billion (S$3.9 billion) in debt payments for the rest of the year, cancelled a share placement overnight, according to International Financing Review. 

“The weak sales trend, if continued, will lead to more developers, especially private ones, defaulting in the near future,” said Mr Raymond Cheng, head of China and Hong Kong research at CGS-CIMB Securities, before the figures were released. 

China’s State Council called on cities to start introducing policies to ensure the healthy development of their property markets, China Central Television reported after a meeting chaired by Premier Li Qiang on Monday.

The Communist Party’s top decision-making body last week pledged to optimise and adjust policies for the property sector. The Politburo also dropped a reference to President Xi Jinping’s mantra that homes are for living in rather than speculation. 

Existing policies have so far failed to sustain a housing rebound, putting the government’s 5 per cent annual economic growth target at risk. Home prices have resumed falling while property investment continues to shrink. 

The Chinese authorities are moving to

address developers’ funding strains.

In July, regulators extended loan relief for builders to ensure the delivery of homes under construction. The securities watchdog vowed to ensure developers’ funding in both debt and stock markets. BLOOMBERG