China stimulus fails to ignite housing sales over key holiday

Asset sales and an increase in loans for developers have failed to spur growth. PHOTO: NYTIMES

BEIJING (BLOOMBERG) - China's embattled property market is struggling to generate a turnaround despite supportive pledges from the top decision-making body, underscoring Beijing's challenge to revive one of the nation's biggest growth drivers.

New-home sales in 23 major cities tracked by China Real Estate Information Corp. fell 33 per cent by area during a five-day national holiday compared with a year earlier. The plummet adds to the pain this year, after combined sales at the top 100 developers halved in the first four months.

That is despite the Politburo making sweeping vows to stimulate the economy and a U-turn in messaging - the top policymaker said it would encourage "real housing demand" - its clearest message condoning relaxation of property curbs.

"Broader and stronger policy incentives haven't restored buyer confidence," said Mr Meng Xinzeng, a real estate analyst at property data firm China Index Holdings.

He added that transactions were not as strong as expected.

The policies however might not be enough to revive sentiment that has turned sour since July. Asset sales and an increase in loans for developers have failed to spur growth.

Easing started around April. The eastern city of Nanjing and manufacturing hub Suzhou are starting to allow residents not born in the city to buy property. The northern city of Harbin retracted a rule banning new home owners from selling within three years. Not far away in Shenyang - where residential values declined for seven months straight - the government ushered in five measures before the holiday to boost home sales.

It worked in some places like Chengdu, but most buyers are staying away. The country's Covid Zero policy is not helping as further lockdowns could happen after top leaders struck a defensive tone on Thursday.

Other sectors are suffering too. Tourist spending over the national Labour Day - a holiday that typically boosts consumption - was 64.7 billion yuan (S$13.5 billion), down 43 per cent from last year. Nomura Holdings estimates that 43 cities are under partial or full lockdown, or are facing some district-level restrictions, affecting about 328 million people.

"If the coronavirus outbreak can be contained by June, the property market may still see a broad rebound," CRIC analysts led by Yang Kewei wrote in a Thursday (May 5) note.

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