BEIJING- China’s average daily home sales during the Golden Week holiday were down 17 percent , based on floor area, compared with last year, despite a series of piecemeal support measures to restore confidence in an ailing property market, according to a survey.
China Index Academy said on Saturday that average daily home sales in smaller cities, known as tier three and four cities, fell 50 percent during the holiday from Sept. 29 to Oct. 6, compared with last year, when the holiday fell between Oct 1-7.
However, the research firm said new home sales rose 62 percent in tier-one cities, suggesting that the support measures, including lower mortgage rates and down payments, could be unlocking pockets of demand in the most sought-after areas.
Tier-one cities, including Shanghai, said several weeks ago they would allow people who have fully repaid their previous mortgage or sold their other homes to make down payments of as little as 35-40 percent , compared with 60-70 percent previously.
The number of visits to property showrooms increased slightly during the holiday, but confidence has not recovered significantly, the research firm said.
The Golden Week holiday is traditionally a peak period for new-home sales in China, with developers offering promotions and releasing new properties on to the market.
New home sales declined around 20 percent year-on-year last month, the survey also showed. Official data for September will be released on Oct. 18.
More support measures could be taken, Citi analysts said in a research note, including through old-village redevelopment and resumption of the central bank’s pledged supplementary lending (PSL) policy.
Confidence in the property sector, which accounts for a quarter of economic activity, has been hit since 2021 when Beijing cracked down on debt accumulation by developers, fueling a debt crisis.
China’s economy will grow less than previously thought this year and next as a struggling property market dogs what was once the world’s growth engine, according to a Reuters poll of economists who said the risks were skewed to further downgrades.
The world’s second-largest economy has been struggling after a brief post-COVID recovery, dragged by huge debt due to decades of infrastructure investment and a property downturn, posing risks not only to itself but also to the global economy.
With 70 percent of household wealth tied up in the ailing property market, coupled with rising youth unemployment, weak consumption demand and the reluctance by depressed private firms to invest, policymakers have been fighting an uphill job in reviving growth.
“The primary culprit is the property sector. This source of growth has now evaporated and won’t be coming back,” said Julian Evans-Pritchard, head of China economics at Capital Economics in Singapore.
“We have long been more bearish than most…but even we have been surprised by the speed at which growth has declined. The deceleration probably still has further to run.”
The Reuters poll of 76 analysts, based in and outside mainland China, predicted the economy would grow 5.0 percent this year, lower than 5.5 percent forecast in a July survey. Forecasts ranged between 4.5 percent and 5.5 percent.
While nearly all economists lowered their growth outlook for this year and next compared with the previous survey, the magnitude of those cuts was still marginal, leaving room for more downgrades. – Reuters
