BEIJING- China’s property sector fell 5.1 percent in 2022 from a year earlier, value-added data from the National Bureau of Statistics (NBS) showed on Wednesday, heaping more pressure on policymakers to revive the sluggish sector in 2023.
Value added in the once-mighty industry was 7.2 percent lower in the fourth quarter than a year before, following a 4.2 percent annual contraction seen in the third quarter, according to NBS data.
The figures indicated that the property sector was one of the biggest drags on the economy last year.
China’s economic growth in 2022 slumped to one of its weakest rates in nearly half a century, hit by a property market slump and by pandemic controls and COVID-19 outbreaks that especially affected the second and the fourth quarters.
Authorities have rolled out a flurry of policies to assist homebuyers and property developers and relieve a long-running liquidity squeeze in the industry that delayed the completion of many housing projects.
Despite that effort, investment in real estate in 2022 was still 10.0 percent lower than in 2021, the first decline since records began in 1999, and property sales slumped the most since 1992, NBS date showed on Tuesday.
Vice-Premier Liu He said at the World Economic Forum’s annual meeting in Davos on Tuesday that China would support healthy development of the property market as the sector was still a pillar industry for the economy.
During a video conference held by the Ministry of Housing and Urban-Rural Development on Tuesday, the regulator vowed to promote completion and handing over of homes to buyers, to help resolve financing risks for property firms and to equally support the balance sheets of state-owned and private property firms.
Meanwhile, China’s Country Garden had some rare good news for the cash-squeezed property sector with an offshore debt repayment on Tuesday, but a closer look reveals just how much developers may still struggle to access capital, developers and analysts said.
China’s largest developer by sales said it repaid its 4.75 percent dollar bonds with outstanding principal totaling $625 million. The payment was due on Tuesday.
The transaction was made possible in part by the government’s aggressive support measures late last year for the crisis-hit property sector, which accounts for one-fourth of the world’s second-largest economy and has been hobbled by souring demand and mounting debt defaults.
But China’s developers face an even more daunting wall of offshore bond maturities in 2023, and the support policies are so far largely limited to a relatively few healthy “performing” developers, with broader improvements in sector sales and liquidity expected only towards the second half of this year.
The next few months could therefore find more developers starting to miss offshore debt obligations, while many developers that have already defaulted will continue struggling to pin down a restructuring plan for viable long-term repayments. – Reuters
