Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

China property market slumps on developers' debt crisis, weak buyer sentiment

Economic Indicators May 26, 2022 02:00AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: People walk next to residential buildings in the coal city of Hegang, Heilongjiang province, northeast China January 2, 2020. Picture taken January 2, 2020. REUTERS/Ryan Woo/File Photo

By Clare Jim and Vijdan Mohammad Kawoosa

HONG KONG (Reuters) - China's property market, a key pillar of the world's second-largest economy, has weakened sharply in the past year as a result of a government clampdown on excessive borrowings by developers, and a COVID-19-induced economic slowdown.

So far this year, more than 100 cities have taken steps to boost home purchase demand via cuts in mortgage rates, smaller down-payments, and subsidies. However, the outlook remains bleak as the government enforces strict COVID curbs in dozens of cities, weighing on consumer confidence. da0e149e-23a0-4e72-8dd4-a14c212d6c9e1

(Home prices in China: https://graphics.reuters.com/CHINA-PROPERTY/znpneojorvl/chart.png )

 

China's property market problems are likely to worsen this year, with no growth in home prices seen for the full year, according to the latest Reuters poll.

Analysts said the national housing inventory is at a high level, particularly in tier-three and four cities which face large de-stocking pressure due to slowing demand. b06fba09-f006-4911-b9ad-242d20236d222

 

(Property sales by area in China: https://graphics.reuters.com/CHINA-PROPERTY/dwpkrnjnjvm/chart.png)

 

Property sales in April, by value, fell at their fastest pace in around 16 years despite more policy easing steps aimed at reviving the sector.

Further rate cuts this month aimed at easing home buyers' mortgage burden did little to convince investors and analysts that they could boost demand.

Fitch Ratings last month lowered its forecast on the property sales by value, expecting them to fall 25%-30% in 2022, compared to a previous forecast of 10-15% fall.

Financial regulators have pledged to keep credit growth stable in the property sector and help homebuyers affected by COVID-19 outbreaks to defer their mortgage payments, the central bank said in a statement on Tuesday. 24b6b938-f697-4de0-a8c2-b2231dd9df263

 

(Property investments in China: https://graphics.reuters.com/CHINA-PROPERTY/gdpzyenaxvw/chart.png)

 

Many private property developers have tightened their belts as they faced a slump in sales and struggled to access funding. It would take many more months before regulators' easing measures have a material impact on the market, they say.

Some developers are heeding Beijing's call and accelerating a push into asset-light businesses such as property services and commercial real estate to cut reliance on a high-debt, high-turnover model blamed for the liquidity crisis. a6c9e676-a3f3-407a-b0de-5c7221264ed24

 

(New construction in Chinahttps: https://graphics.reuters.com/CHINA-PROPERTY/gkvlgzjzzpb/chart.png)

 

New construction starts plunged 44.19% in April from a year earlier, the fastest pace since January-February 2020 in the early days of the pandemic. Developers also slowed new construction as they tried to preserve capital, adding to uncertainties facing potential home buyers.

Yuan loan growth tumbled in April as the pandemic jolted the economy and weakened credit demand, official data showed earlier this month. Household loans, including mortgages, contracted by 217 billion yuan, pointing to a deep freeze in the market.

 

 

China property market slumps on developers' debt crisis, weak buyer sentiment
 

Related Articles

Brazil posts trade surplus of $8.8 billion in June
Brazil posts trade surplus of $8.8 billion in June By Reuters - Jul 01, 2022 1

BRASILIA (Reuters) - Brazil's trade surplus reached $8.814 in June, official figures showed on Friday, below market expectations. Economists polled by Reuters had projected a...

Factory data dampen global hopes for 'soft landing'
Factory data dampen global hopes for 'soft landing' By Reuters - Jul 01, 2022 6

By Jonathan Cable and Leika Kihara LONDON/TOKYO/WASHINGTON (Reuters) - Global manufacturing struggled in June as higher prices and a darker economic outlook left consumers wary of...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email