What’s new: China’s real estate market is having a rough start to the year, with January new property sales plunging to a monthly low not seen in five years, despite government measures to boost the ailing sector as it grapples with a liquidity crisis.
New property sales by China’s 100 biggest developers totaled 235 billion yuan ($33 billion) last month, down 34.2% year-on-year and 47.9% from December, according to data provided by China Real Estate Information Corp. (CRIC) on Wednesday.
The drop was due to a seasonal lull and constraints from both supply and demand sides, CRIC said in a report accompanying the data.
In first-tier cities in January, property sales by floor space fell 22% on the year and 38% from the previous month to 1.52 million square meters. In comparison, floor space sold in second and third-tier cities totaled 7.37 million square meters, off 18% and 44%, respectively, CRIC data show.
The background: Over the past year, local governments in major Chinese cities including Beijing, Shanghai and Guangzhou have rolled out policies to revive property demand, such as easing buying restrictions and lowering minimum down-payment requirements.
In a meeting last week, the Ministry of Housing and Urban-Rural Development urged local governments to meet eligible developers’ financing needs and said it would give localities more autonomy to tweak property policies to spur homebuying.
Extraordinary measures may be needed to turn China’s real estate sector around, despite some key cities still having room to further relax mortgage rates and loan and purchase restrictions, Changjiang Securities Co. Ltd. said in a report Monday. But the firm also predicted the decline in property sales will moderate from the second quarter.
Related: In Depth: China Intensifies Efforts to End Property Crisis
Contact reporter Ding Yi (yiding@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)
Get our weekly free Must-Read newsletter.
