China’s Property Market Ends 2024 in Slump as Home Sales Plunge
China’s property market ended 2024 on a somber note, with December home sales plunging significantly, marking the continuation of a prolonged slump. New home sales by the country’s top 100 real estate companies plummeted by 34.6% from the previous year, amounting to 451.3 billion yuan. This fall exceeded November’s decline of 29.6% and concluded the year with total sales 16.5% lower than 2022, overshooting the anticipated 15% reduction.
Government Efforts to Revive the Property Market
Despite a rise of 15.7% in sales from November to December, the housing market remains sluggish, with sales dropping in 20 out of the past 24 months. The downturn has caused significant economic repercussions and financial strain on developers, leading to debt repayment difficulties and project delays. To stimulate demand, cities like Beijing and Shanghai have relaxed home buying restrictions. However, potential buyers remain cautious due to falling prices, project uncertainties, and developer defaults.
Financial Struggles of High-Profile Developers
High-profile developers such as Country Garden Holdings Co. and China Evergrande Group are grappling with severe financial hardships. The latter narrowly escaped liquidation, indicative of the intensity of the crisis. The Chinese government has shown increased support for the sector, including potential unsecured loans for eligible developers. Nevertheless, the real estate market’s future remains uncertain.
Regional Impact and Broader Economic Picture
Surging interest rates and regulatory scrutiny in Asian economies, including South Korea, Vietnam, and Indonesia, are causing distress for builders and creditors, further highlighting the housing market woes in the region overshadowed by China’s crisis. The slide in China’s home sales coincides with the country’s economy growing at a 5.2% pace in the first three quarters of the year. Despite the ongoing weakness, the government has ramped up construction spending and eased home-buying curbs to stimulate domestic demand.
