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China’s Unsold Housing Stock Reaches a Five-Year Peak

Real estate sector has slowed sharply this year with sentiment shaken by tighter regulations and a liquidity crisis that engulfed the largest and most debt-laden developers

A housing estate in Shenzhen, Guangdong province. Photo: Reuters


Unsold housing stock in China’s 100 biggest cities rose to its highest level in five years in November, according to a private sector survey, as weak demand in smaller centres added to headaches for the country’s property market.

Inventories expanded 2.1% at the end of last month from a year earlier to 521.1 million square metres, a report from E-house China Research and Development Institution showed on Friday.

The increase in November also marked the 36th consecutive month of on-year gains.

The Chinese property sector has slowed sharply this year, with sentiment shaken by tighter regulations and a liquidity crisis that has engulfed some of the country’s largest and most indebted developers.

In November, China’s new homes continued to face “supply exceeding demand” with 44.95 million square metres on the supply side and 34.37 million square metres in home transactions by volume, the Shanghai-based institution said.

“The biggest problem in current supply and demand is the prominent weakness in home transactions,” E-house said in its report.


Significant Contraction

Barclays downgraded its China growth forecast for 2022 by 60 basis points, to 4.7%, in view of the more significant contraction in housing activity.

“China’s real estate investment is experiencing mounting downward pressures as housing demand weakens due to the trial property tax scheme and developers facing funding stresses and cutting investment,” economist Jian Chang said.

“High-frequency data show home sales stayed deep in contraction territory in October and early November.”

The property woes have hammered smaller cities with persistent population outflows or uncertain economic prospects, leading to a build-up in local housing inventories.

New home inventories in tier-three and four cities stood at 224.87 million square metres, compared with 30.52 million square metres in tier-one cities, the property research agency said.


  • Reuters, with George Russell




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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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