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China property market shows little signs of revival despite stimulus

HONG KONG/BEIJING – China's troubled property market is showing little signs of a recovery in the short term despite a series of government stimulus measures to help revive activity in the sector which makes up a quarter of the nation's economic output.

Homebuyers, wary of the uncertain economic outlook, have remained on the sidelines, while property developers and agents said sales were still soft following a short-lived burst of activity in major cities like Beijing and Shenzhen.

Beijing resident Daniel Song, who was given 3 million yuan (US$410,043) by his parents in the beginning of the year to buy an apartment, recently gave up on the idea, concerned about his income security.

“I am not sure about my career future in today’s economic situation,” said the 28 year-old computer programmer.

China has quickened the pace of policy stimulus in recent weeks amid a deepening debt crisis in the sector, highlighted by the severe liquidity troubles in China Evergrande Group and Country Garden.

But the support measures have yet to have any notable impact among buyers still grappling with low confidence. China’s new home prices fell for the third straight month in September, down 0.2% from August, a traditionally peak home buying period, official data showed on Thursday.

Separate figures this week also showed property sales and investment extended double-digit declines, down 19.8% and 18.7% respectively, in a sign the world’s second-biggest economy is not out of the woods yet despite better-than-expected headline gross domestic product (GDP) data.

Much of the easing policies have lowered the buying costs, but done little to create new demand, realtor Centaline China CEO Andy Lee said.

“The overall size of the pie is still the same,” Lee said, referring to the market demand, adding some of the September purchase was delayed from the previous two months due to market expectations of stimulus policies. “To make it bigger it’ll have to depend on an economic recovery.”

Sales in October are expected to stay soft, developers said, as few of the visits from buyers to sites have realised into actual purchases.

An official at a developer who has projects in major cities said its sales during the Golden Week was 20% lower than a year ago, though better than September. The person, who declined to be named because he was not authorised to speak to media, added that sales have dropped again after the holiday ended.

“In the beginning of the year, the industry expected a bad first-half but a better second-half. But the reality is, it’s a bad first-half and an even worse second-half.”

Nomura also said it is too early to call the bottom for the property sector.

“Recent property easing measures may have only led to more supply of homes, adding more downward pressures on home prices, given still-sluggish housing demand. The moderate recovery in top-tier cities could continue to drain housing demand in low-tier cities,” it said.

A view of downtown Guangzhou, China, on Aug 22, 2023. (Photo: Bloomberg)

Sales performance differed a lot among cities, with new home prices up on month in Beijing and Shanghai in September, and down in Shenzhen and Guangzhou. Demand remained lukewarm in smaller cities struggling with excess supply.

S&P Global Ratings this week revised down its forecast for China’s property sales to drop by 10%-15% this year from 2022, compared to its earlier forecast of a mid-single digit percentage drop. It also expects 2024 sales to drop by a further 5%.

“In a bad real estate market and a dismal economy, I don’t have that much desire to buy a new house, and I want to keep the money in my hands,” said Doris Dong, 30 year-old housewife living in Beijing.

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