Shanghai, China – The real estate market in China continues to face challenges as home sales remained stagnant in March, extending a downturn that started earlier this year. Preliminary data from China Real Estate Information Corp. revealed that the value of new-home sales from the 100 biggest real estate companies dropped around 46% compared to the same period last year, reaching 358 billion yuan ($49.6 billion) after a significant 60% decline in February.
The prolonged slump in property sales has put pressure on the nation’s leading developers, impacting the financial health of major state-owned banks. Despite efforts by Beijing to revitalize the domestic economy and support struggling developers, the sector remains bleak. Recent announcements from prominent companies like Country Garden Holdings Co. and China Vanke Co. reflect the challenges faced by the industry, with missed deadlines and plummeting net incomes.
Data from CRIC suggested that while March typically sees a surge in home sales, the numbers were still below average compared to the previous quarters, indicating a lack of improvement in the market. The report also highlighted a mixed picture for home prices in China, showing an increase in new home prices but a decline in the second-hand market. CRIC warned that the new-home market is unlikely to recover soon, keeping the pressure on developers to improve sales.
Fitch Ratings recently downgraded the credit rating of some major builders, including Vanke and Longfor Group Holdings Ltd., citing the weakness in the property market. Additionally, the agency revised its forecasts for the housing market, anticipating a 5%-10% decline in new home sales for the year, compared to its previous estimate of 0%-5%.
Despite the challenges faced by the real estate sector, the index tracking major developer shares in mainland China experienced some gains on Monday, offering a glimmer of hope for the industry. With uncertainty looming over the future of the market, developers and investors are closely monitoring the situation for any signs of improvement or further deterioration.