The downward trend in home sales accelerated in December
The beginning of a new year means joy and hope for many people, but not for big Chinese developers at the dawn of 2024, after a downward trend in home sales accelerated in December as discounts and easing measures failed to spark demand. China’s top 100 developers in terms of sales reported that December transaction value dropped 34.6% year-on-year to 451.3 billion yuan (US$63 billion), according to data released by China Real Estate Information Corporation (CRIC) late Sunday. The same metric declined 29.6% year-on-year in November.
The sluggish performance brought full-year sales to 5.4 trillion yuan, a 16.5% drop compared with 2022, even though December sales rose 15.7% compared with November. Only 16 out of the 100 top developers reported a sales value of above 100 billion yuan in 2023, four fewer than in 2022. Underscoring that demand will remain a challenge into 2024, the lacklustre sales figures came despite China’s major developers offering discounts as part of a so-called year-end home purchasing festival in December.
Dip Despite Discounts
At least eight of the 10 biggest developers offered special discounts last month, with some willing to sell units at the most favourable prices in a year. Poly Developments and Holdings Group, which ranked first by sales among Chinese developers, in December launched over 100 units with special offers in China’s central Hunan province and southern Fujian province.
In Beijing, a project by China Vanke, the second largest Chinese developer, cut its average home prices by around 1 million yuan, while a project by China Jinmao, the 12th-ranked Chinese builder, offered a 4% discount. Easing measures rolled out by Chinese authorities failed to revive the sliding real estate sector, which along with related industries accounts for around a quarter of the country’s gross domestic product.
Mega-cities Beijing and Shanghai last month reduced down payment ratios for first-time homebuyers and expanded the definition of non-luxury homes to extend benefits to more buyers. Authorities in Shenzhen and Guangzhou launched similar policies in November and September. Yet transacted sales in tier-one cities fell 10% year-on-year in December, while full-year sales slid 2%. Beijing saw its full-year home sales fall 3%, and Shanghai reported a 10% decline.
“The property sector is situated at a stage of not stepping out of the woods, despite rescue policies including those in support of developers’ financing demand launched by regulators,” CRIC said in its note. Sluggish sales performance will continue to weigh on the liquidity of property firms over the near term, as it will take time for the comprehensive recovery that the industry is looking for to restore buyer confidence, it added.
Sales will remain flat or edge downward in January, as demand is expected to continue its falling trend, the agency forecast. Home sales in tier-1 cities will remain flat, while lower-tier cities – without large populations and levels of economic activity to spur demand – will remain slow in the long term, it added.