Property sales in mainland China declined for the tenth straight month in February, as lower demand during the Spring Festival holidays weighed and expectations are the beleaguered sector’s woes will continue, pressured by low homebuyer confidence.
China’s top 100 developers posted total contracted sales of 185.7 billion yuan (US$25.8 billion) in February, a decline of more than 60 per cent year on year, and a fall of close to 21 per cent month on month, according a report published on February 29 by the China Real Estate Information Corp (CRIC), a research firm.
“While local governments have been sending out favourable signals [to property developers] and easing restrictions for homebuyers, there is still an imbalance between supply and demand at this point, and it takes time for the market to regain confidence,” according to analysts at CRIC.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
Nomura’s property analysts said they expect property sales to continue to weaken year-on-year in March, due to the high base effect of March 2023, when sales received a boost from the Chinese economy’s reopening.
Residential buildings under construction at Tahoe Group’s Cathay Yard development in Shanghai, China. Photo: Bloomberg alt=Residential buildings under construction at Tahoe Group’s Cathay Yard development in Shanghai, China. Photo: Bloomberg>
“It still remains uncertain whether the depressed homebuyer confidence that prevails now can be altered, even with some local governments’ recent notable policy support,” said Nomura analysts Jizhou Dong and Riley Jin in a note.
“We expect new home sales to be sharply lower year on year for at least the next several months. This is because a temporary, modest boost in home sales from the latest rounds of local government policy relaxation released in August and September – including removal of home purchase and mortgage restrictions – has diminished,” wrote analysts at Fitch Ratings.
State-owned Poly Developments saw its sales drop 54.1 per cent year on year in February, while Shenzhen government-backed China Vanke recorded a 52.1 per cent decline.
Meanwhile, top private developers like Country Garden saw a 78 per cent year-on-year decline in sales in February, while Longfor Group saw its sales fall by 55 per cent.
The collapsing sales are not just a reflection of weak homebuyer confidence but also the result of efforts to reorient the economy away from the previous over-dependence on property for driving growth.