The China Real Estate Enterprise Sales TOP100 list for the period of January to July 2024 was released by the Ke Rui Research Center on Thursday, August 1st. According to the data in the report, sales of new homes by China’s largest real estate developers saw an accelerated decline in July, indicating that the real estate industry is still in a state of recession, becoming a major obstacle to economic development.
In July, the sales of the top 100 real estate developers in China decreased by 20% year-on-year to 279.1 billion yuan (39.87 billion US dollars), a wider decline compared to the 17% decrease in June. Calculated monthly, sales dropped by 36%.
The Wall Street Journal reported on Thursday that these data, combined with a series of surveys, show that China’s vast manufacturing sector continues to weaken, and the economic outlook for the third quarter is not optimistic. After the economy underperformed expectations in the second quarter, economists doubt the effectiveness of the Chinese government’s efforts to stimulate the real estate market and the overall economy.
In May of this year, the Communist Party of China introduced its boldest housing market rescue measures to date, canceling the lower limit on individual mortgage rates and reducing the down payment requirements for homebuyers.
In response to the massive surplus of unsold properties, the central government urged local governments to purchase unsold properties and convert them into affordable housing, with the central bank pledging to provide billions of dollars in cheap funding for this purpose. The Chinese government has also granted local officials greater autonomy in formulating real estate policies, easing price restrictions, and other limitations to stimulate demand.
However, consumers are still unwilling to buy houses. Economic downturns and a surge in unemployment numbers have increased people’s worries about the economy. For cash-strapped local governments and affiliated state-owned enterprises, they are also unable to purchase unsold properties.
Economists at Nomura Holdings commented on the Thursday report, saying that the Chinese real estate market has not yet hit bottom. Despite some key indicators showing potential positive signs, the crisis is far from over.
They warned that besides the sharp decline in home sales, new unfavorable factors have emerged that may further suppress housing demand.
Economists say that for a real turnaround to occur, Chinese officials need to take more decisive stimulus measures. “We still believe that Beijing is moving in the right direction to address the housing crisis as its policy focus has shifted towards ensuring the delivery of presold homes. However, it has proven to be a challenging task, and we believe the market needs to be more patient and wait for stronger measures.”