China Property: Lived-in Home Sales Rise but Prices Fall in Shenzhen, Beijing, Shanghai
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Loading... - Donghai Huang
- 13 Dec 2024
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Recent data indicates a notable increase in lived-in home sales across some of China's largest cities, including Shenzhen, Beijing, and Shanghai. However, despite this uptick in transactions, home prices continue to decline, raising concerns about the overall health of the real estate sector.
In Shenzhen, the number of second-hand homes sold reached 2,390 last week, marking the highest volume in over three years, according to the Shenzhen Real Estate Intermediary Association. Similar patterns have emerged in Beijing and Shanghai, where second-hand home transactions have also seen an increase in recent months. This surge in sales is largely attributed to the release of pent-up demand, spurred by ongoing incentives aimed at attracting homebuyers back into the market.
Despite the rise in sales, the prices of lived-in homes are experiencing significant declines. In Shenzhen, home prices have dropped by approximately 7% in the first 11 months of the year, as reported by Centaline Property. The situation is even more pronounced in Shanghai, where prices have fallen by about 10%, and in Beijing, where the decline exceeds 12%. Meanwhile, new home sales continue to decline, further complicating the market landscape.
Lu Ting, chief China economist at Nomura, cautioned against concluding that the real estate sector has bottomed out. He emphasized that the property crisis, which has persisted for nearly four years, is far from over. The ongoing challenges in the sector are contributing to broader economic issues, including shrinking local government revenues and diminishing household assets.
New home sales have plummeted by nearly half from their peak, placing significant strain on major developers who are grappling with debt restructuring and the completion of pre-sold but unfinished homes. In the first ten months of the year, new home sales totaled 6.7 trillion yuan (approximately US$920 billion), reflecting a 22% decline compared to the previous year.
State-backed China Vanke reported a 34.4% decline in contracted sales for November, totaling 20.1 billion yuan, which is a widening drop from a 22.8% decrease in October. Similarly, Country Garden Holdings, once the largest developer in China, experienced a staggering 52.3% decline in contracted sales for November, amounting to 3.01 billion yuan, compared to a 31% drop in October. In response to these challenges, chairwoman Yang Huiyan has pledged to deliver unfinished homes and ensure timely wage payments, particularly for migrant workers.
The property market continues to grapple with an oversupply of homes and a lack of buyer confidence. According to S&P Global, the persistent decline in home prices has not only diminished the wealth of homebuyers but has also eroded their confidence in the market.
In light of these challenges, China's Politburo recently vowed to boost domestic demand and stabilize both the property and stock markets, signaling a commitment to addressing the ongoing crisis in the real estate sector.
While the increase in lived-in home sales in major Chinese cities may suggest a glimmer of recovery, the persistent decline in prices and the broader economic implications indicate that the real estate sector remains under significant strain. The challenges faced by developers and the lack of buyer confidence highlight the complexities of the market, making it clear that a comprehensive recovery will require sustained efforts and strategic interventions from policymakers.
