China home sales continue to fall despite government relief

The rapid decline shows the waning impact of the latest relief package announced in May. At least 10 city governments have loosened or scrapped new home price guidelines to let market demand play a bigger role, a move that is expected to prompt more real estate companies to cut prices further.

The sector continues to be a drag on China’s economy , which needs more stimulus to meet the government’s 5% growth target this year, according to Bloomberg Economics.

Residential buildings in Chengdu, China. Photographer: Raul Ariano/Bloomberg.

The crisis has weighed on everything from the job market to consumer spending and household wealth over the past two years.

China has been considering a new funding option for local governments to buy unsold homes to support the market, people familiar with the matter said in August. The latest proposal would allow local governments to finance their home purchases through special bonds.

According to the latest official figures, as of July, the country had 382 million square meters of unsold new homes, equivalent to the area of Detroit.

In June, Dexin China Holdings became the latest construction company to be ordered into liquidation by a Hong Kong court. Meanwhile, Country Garden Holdings is considering extending the payment of some of its yuan bonds again, Bloomberg News reported earlier this week.

In a report released on August 28, Swiss bank UBS lowered its growth forecast for China this year and 2025 because the real estate crisis is more severe than expected and the market has not yet bottomed out.

The housing crisis, coupled with China's economic growth slowing since March, has led UBS to forecast that the world 's second-largest economy will grow 4.6% in 2024, down from its previous forecast of 4.9%. For 2025, UBS has lowered its growth forecast from 4.6% to 4%.

Although Beijing began easing policies for the real estate market in late 2022, including reducing mandatory down payment requirements, lowering mortgage interest rates and removing some restrictions on home purchases, the implementation of these policies in practice has been sluggish. Therefore, the announced policies have not brought many positive effects to the market.

Le Na (According to Bloomberg)

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