China's Housing Market Slump Persists Despite Government Intervention
China's residential slump worsens in August, new-home sales drop 26.8% as government efforts falter
China Housing MarketReal EstateGovernment InterventionEconomic GrowthBloomberg EconomicsReal EstateSep 01, 2024
The value of new-home sales from the 100 biggest real estate companies fell to 251 billion yuan ($35.4 billion) in August. This downward trend shows that the government's latest rescue package, unveiled in May, is losing steam.
At least 10 city governments have relaxed or scrapped new-home price guidances, allowing market demand to play a bigger role. This move is expected to drive more real estate companies to cut prices, further exacerbating the market's woes.
The sector's struggles are weighing heavily on China's economy, which needs more stimulus to meet the government's 5% growth target this year. The crisis has had far-reaching consequences, affecting everything from the job market to consumption and household wealth over the past two years.
In an effort to prop up the market, China is considering a new funding option for local governments to buy unsold homes. The proposal would allow local governments to fund their home purchases via special bonds. As of July, the country had 382 million square meters of unsold new homes, equivalent to about the size of Detroit.
Cash-strapped developers, many of whom have been in default for over a year, are counting on a sales revival to persuade debt holders and avoid liquidation. The situation is dire, with Country Garden Holdings Co. considering extending payments on some of its yuan bonds again.
The government's efforts to rescue the market have so far been unsuccessful, and it remains to be seen what other measures will be taken to address the crisis.
About China Real Estate Information Corp. China Real Estate Information Corp. is a leading provider of real estate data and analytics in China. The company tracks sales data from the 100 biggest real estate companies in the country.About Bloomberg Economics Bloomberg Economics is a leading provider of economic research and analysis. The firm provides insights and forecasts on global economic trends and developments.
Frequently Asked Questions
What is the current state of China's housing market?
China's housing market is experiencing a slump, with new-home sales dropping 26.8% in August from a year earlier.
What measures has the government taken to address the crisis?
The government has unveiled a rescue package, relaxed new-home price guidances, and is considering a new funding option for local governments to buy unsold homes.
How is the crisis affecting China's economy?
The crisis is weighing heavily on China's economy, affecting everything from the job market to consumption and household wealth.
What is the outlook for China's economic growth?
China's economic growth is expected to be around 5% this year, but the government needs more stimulus to meet this target.
What is the situation like for cash-strapped developers?
Cash-strapped developers are counting on a sales revival to persuade debt holders and avoid liquidation, with some considering extending payments on their bonds.
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