China’s major property developers saw home sales decline in July from the previous month and failed to extend a rebound seen in June, a a spreading mortgage boycott crisis further weakens market confidence.
The top 100 property developers’ sales reached 523.1 billion yuan in July, sliding 28.6% from the previous month, said the China Real Estate Information Corporation, compared to more than 60% month-on-month jump in June which was partly driven by pent-up demand after Covid lockdowns were lifted.
It added that the drop in July was largely in line with the average decline of 30% for the same period in previous years.
The sales fell by 39.7% in July from a year earlier, narrowing slightly from the drop in June, it said.
The housing market’s demand and purchasing power has been overdrawn and industry confidence is at a low level, and property developers are expected to face more pressure to cut inventories, it said.
In the first seven months of the year, the top 100 developers’ sales slid 49% from the same period last year, showed the data.
In the top 30 cities, home sales by floor area fell by 16% in July from the previous month and sliding 33% from a year earlier, according to the CRIC.
Except some key cities including Shanghai and Chengdu where floor area sold hit the highest this year in July, 26 tier-two and tier-three cities saw housing market weaken again last month, with sales sliding 20% on month and sliding 38% year over year, showed the data.
Analysts say that the spreading mortgage boycott has intensified market concerns about market recovery, which further weakens potential home buyers’ expectations.
Currently, mostly government policy measures are focused on solving difficulties at individual projects and there hasn’t been a overall rescue plan, said Xizheng Capital.
Looking ahead, year-over-year drop in home sales are likely to narrow further due to more supportive policy measures and falling comparison based last year.
However, “a turning point may not come until the end of the year,” said an executive at a property developer in south China.