China's property market continues to struggle despite government stimulus

Despite a series of government stimulus measures, China's property market continues to show little signs of revival, leaving investors and homebuyers in a state of uncertainty. The property sector plays a crucial role in the nation's economic output, accounting for a quarter of it.

Homebuyers, wary of the uncertain economic outlook, have remained cautious, resulting in stagnant sales even in major cities like Beijing and Shenzhen. Reuters cited a Beijing resident, Daniel Song, who had plans to purchase an apartment earlier this year, decided to abandon his idea, expressing concern about his financial security amidst the current economic climate.

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

Add WION as a Preferred Source

To address the deepening debt crisis in the property sector, the Chinese government has recently implemented a series of stimulus measures, aiming to revive the industry. This move follows the liquidity troubles faced by companies such as China Evergrande Group and Country Garden.

However, these support measures have yet to make a substantial impact on buyers, who are still grappling with low confidence. Official data from September revealed that China's new home prices fell for the third consecutive month, down by 0.2 per cent from August, a period traditionally associated with peak home buying.

"Much of the easing policies have lowered the buying costs but done little to create new demand," Reuters quoted Centaline China CEO Andy Lee. He explained, "The overall size of the pie is still the same," referring to the market demand.

In response to these ongoing challenges, real estate developers anticipate that sales will remain disappointing in October. Even though potential buyers have visited sites, these visits have not translated into actual purchases.

An official at a major developer revealed that their sales during the Golden Week were 20 per cent lower than the previous year. Sales improved slightly compared to September but subsequently dropped again after the holiday period 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," Reuters quoted the unnamed developer as saying.

Nomura, an international financial services group, expressed reservations about calling a bottom for the property sector, suggesting that recent easing measures may have resulted in an oversupply of homes, further pressuring prices in a market with weak demand.

Sales performance in different cities varied, with new home prices increasing in Beijing and Shanghai but decreasing in Shenzhen and Guangzhou in September. Smaller cities with excess supply continued to face tepid demand.

S&P Global Ratings also adjusted its forecasts, anticipating a more substantial decline in China's property sales, now expecting a drop of 10-15 per cent this year compared to 2022, rather than the earlier projection of a mid-single digit percentage decline. They also anticipate a further 5 per cent drop in sales in 2024.

"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," Doris Dong, a 30-year-old housewife in Beijing told Reuters.

(With inputs from Reuters)

WATCH WION LIVE HERE