China home sales fall again as policy shifts fail to stem decline

The slide in China’s home sales accelerated in December, underscoring the challenges to arrest the country’s property slump. 

The value of new home sales among the 100 biggest real estate companies fell 34.6 per cent from a year earlier to 451.3 billion yuan ($64 billion), compared with a 29.6 per cent decline in November, according to preliminary data from China Real Estate Information Corp. on Sunday. 

That puts major developers’ full-year sales 16.5 per cent lower than 2022, worse than the institution’s earlier estimate of a 15 per cent drop. December’s sales were up 15.7 per cent compared with the previous month. 

China’s prolonged housing downturn has weakened the economy and hurt developers that are struggling to repay debts and complete projects. In the latest move to revive demand, authorities relaxed homebuying curbs in Beijing and Shanghai, two of the country’s biggest housing markets. 

Officials in the two mega cities cut downpayment requirements for some homebuyers and also changed the definition of so-called non-luxury homes, effectively allowing more residences to qualify for lower mortgages. The changes followed central government guidance to cut downpayment requirements in late August. 

Despite policy changes, the market remains sluggish, with home sales plunging 20 out of the past 24 months. Buyers remain on the sidelines, spooked by price drops, construction delays and company defaults. 

Industry giant Country Garden Holdings Co. defaulted on a dollar bond for the first time in late October. China Evergrande Group, the world’s most indebted developer, narrowly avoided liquidation this month when a winding-up court hearing was postponed, as it struggles to restructure its borrowings.

The government has signaled stronger support to ease developers’ funding woes. China’s vice housing minister earlier this month pledged to avoid a cascade of debt defaults. Last month, authorities created a draft list of developers eligible for bank support and may allow lenders to offer them unsecured loans for the first time, people familiar have said.