China’s property sales remain sluggish despite China’s central bank enacting policies to stimulate the market.
According to China Real Estate Information Corp (CRIC), there is a consensus that the real estate sector is on a downward spiral and is truly heading for an era of negative growth.
The Chinese regime and the central bank introduced various new policies in January in an effort to revive sales. Local provincial governments in China were doing everything they can to streamline the home loan application process. Many incentives were introduced to encourage more sales.
However, China’s real estate market did not show the expected recovery. According to statistics from the China Index Academy on Jan. 31, total sales of the top 100 real estate enterprises in January was 422.33 billion yuan (about $63 billion), down 31.7 percent year-on-year, while equity sales in the top 100 real estate enterprises were 325.54 billion yuan (about $45.5 billion), down 35.2 percent year-on-year. In addition, according to the China Index Academy, the pace of land acquisition in the top 100 real estate enterprises significantly slowed down, with land acquisition amounting to 60.6 billion yuan (about $8.9 billion) in January, down 29.4 percent year-on-year.
On Feb. 2, CRIC announced the sales volume of real estate companies in January. According to the report, those real estate enterprises only made 354.29 billion yuan (about $53 billion) in sales in January, with a 32.5 percent year-on-year drop and a 48.6 percent quarter-on-quarter drop in the monthly sales volume.
The report predicts that China’s real estate supply, demand, and transaction volume will not show any significant signs of recovery in the short term, and overall sales will remain low. The report concludes that the scale of real estate sales in China bottomed out in 2022. The area of new constructions, real estate investment, as well as corporate investment enthusiasm also fell to the bottom. There is now a consensus that the industry is in decline and will face an era of negative growth, and the optimism level for 2023 is essentially nonexistent.
The report also mentioned that Chinese real estate companies will have massive debt repayments coming in the first three quarters of 2023. Since 2021, the debt burden of real estate companies has been burgeoning, and debt repayments have been under pressure as the amount of debt issued by Chinese real estate companies has exceeded the due amount. The report concluded that improving sales is the core for avoiding a real estate market crash, but the overall market demand and purchasing power are still weak. The weakness of property sales is also reflected in the latest personal home loan data released by the regime.
On Feb. 3, the Chinese Central Bank released the “Report on the Investment of Loans by Financial Institutions in the Fourth Quarter of 2022,” which stated that the balance of personal home loans in China increased by only 1.2 percent year-on-year at the end of 2022, a 10 percentage point drop from the end of 2021.
Such gloomy statistics in the Chinese real estate sector signal more serious challenges facing China’s economy in the next few years since real estate constitutes around a quarter of China’s total GDP. The regime is scrambling to reverse the downturn since a weak real estate sector can destabilize the whole Chinese economy.
