Tuesday, April 16, 2024



Chinese city Zhengzhou tells state-owned company to buy second-hand homes to reduce new housing inventories


A man rides a scooter past apartment highrises that are under construction near the new stadium in Zhengzhou


Mon, Apr 15, 2024

BEIJING (Reuters) - China's central city of Zhengzhou has asked residents to sell their second-hand homes to a local state-owned company and buy new ones instead, in a bid to reduce new-home inventories and boost the local property sector.

Local state state-owned company Zhengzhou Urban Development Group Co. will buy 500 second-hand homes from April 20 to June 30, according to a notice released by the Zhengzhou Real Estate Association on Monday.


Residents must buy a new home in the main urban area for a total price that is not less than the total price of the home they are selling, the notice said.

Most of China's small and medium-sized cities have suffered frail property markets, with the entire property sector in a liquidity crisis since a crackdown on high leverage on developers in 2021.

In Zhengzhou, new home prices fell month-on-month for a 12th straight month in March, according to data from China's statistics bureau on Tuesday.

Local cities that have been granted full autonomy to adjust property market policies have eased restrictions on home purchases, lowered mortgage rates, reduced down payments and offered subsidies for home purchases.

These policies have only limited short-term impact, partly because potential buyers have been wary of purchasing new homes amid concerns about the ability of indebted developers to deliver projects on time.

"As the bottom has yet to be confirmed, we expect property to remain a major drag on growth this year. Policies to stabilise the market will likely still be needed in the months ahead," Lynn Song, chief economist of Greater China at ING, said in a research note on Tuesday.

(Reporting by Liangping Gao and Ryan Woo; Editing by Gerry Doyle)
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China's new home prices decline at fastest pace since 2015


A general view shows a construction site of residential apartment blocks in Beijing

Updated Mon, Apr 15, 2024,

By Liangping Gao and Ryan Woo

BEIJING (Reuters) -New home prices in China fell at their fastest pace in more than eight years in March as the debt woes of major property developers continued to drag on demand and the economic outlook.

China's property sector, accounting for nearly a quarter of the economy, has been engulfed by a debt crisis since 2021 after a regulatory crackdown on high leverage among developers triggered a liquidity crunch, with a string of them reporting weaker financial results for 2023 last month.


New home prices in March dropped 2.2% from a year earlier, marking the biggest decline since August 2015, and worse than a 1.4% fall in February, according to Reuters calculations based on National Bureau of Statistics (NBS) data.

Prices fell 0.3% month-on-month, matching February's drop.

Chinese authorities have been ramping up measures to prop up the troubled sector, including relaxing home purchase curbs, supporting urban village renovation, and pushing banks to quicken new loan approvals to cash-strapped developers.

Analysts say many of these policies are piecemeal in nature or have only limited short-term impact, which in turn is keeping home buying sentiment in check and curbing a broader full-blown recovery.

Declines in home prices worsened year-on-year in tier-one, tier-two and tier-three cities.

The falling property data, contrasted with the faster-than-expected Chinese GDP growth in the first quarter, suggested it will continue to be a drag on the economy seeking to find a firmer footing after the COVID-19 pandemic.

"There's not much of an improvement in the outlook from here. I think there's still downside risks to the economy. It's pretty clear the property glut is still continuing," said economist Woei Chen Ho at UOB in Singapore.

Property investment and sales fell at a faster pace in March from a year earlier, according to Reuters calculations based on separate official data on Tuesday.

"We estimate the property downturn will drag GDP growth by 0.3 ppt in 2024. Property investment is expected to drop 12% this year," economists at ANZ said in a research note.

Potential buyers have also been wary of purchasing new homes because of concerns about the ability of indebted developers to deliver projects on time.

Financing support should be extended to real estate projects to ensure that homes are delivered on time, Vice Premier He Lifeng, China's economic tsar, said over the weekend.

The delivery of homes on time will help stabilise expectations, He said during an inspection tour in the central city of Zhengzhou.

But without more aggressive stimulus policy, confidence and prices may not improve as quickly as the authorities hope for.

"Absent the monster spending splurge of years gone by, real estate investment, dwelling prices and new dwelling sales are set to fall throughout 2024," Harry Murphy Cruise, economist at Moody's Analytics, said in a research note.

(Reporting by Ella Cao, Liangping Gao and Ryan Woo; Editing by Jacqueline Wong)
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