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China’s real estate sector has slowed significantly this year as a result of increased liquidity crisis and regulatory oversight.
The unsold housing stock in China’s 100 largest cities rose to a five-year high in November, according to a private sector survey, as weak demand from smaller centers added to headaches in the country’s real estate market.
Inventories rose 2.1 percent from 521.10 million square feet at the end of last month, according to a report by China’s E-house Research and Development Organization on Friday.
The November rise was also the 36th consecutive year of the year.
China’s real estate sector has slowed significantly this year, with stricter regulations and a a liquidity crisis that has included some of the largest and most successful developers in the country.
In November, new homes in China continued to face “supply exceeding demand” in terms of volume of 44.95 million square meters of supply and 34.37 million square meters of house transactions, the Shanghai organization said.
“The biggest problem with current supply and demand is the significant weakness in domestic transactions,” E-house said in its report.
Property problems have been hit by smaller cities with sustainable population outflows or uncertain economic forecasts, leading to the accumulation of local housing inventories.
Inventories of new homes in third and fourth cities were 224.87 million square feet, compared to 30.52 million square feet in primary cities, the property research organization said.
Leverage
Yan Yuejin, director of research at E-house, hoped to ease home buying policies in December and the first quarter of 2022 in three to four cities.
The decline in real estate is expected to spill over into the first half of 2022 as housing prices and sales fall as tight credit policies and reduced demand for real estate taxes, a survey showed by Reuters last week.
Moody’s said in a statement that the government would take a step-by-step and cautious approach to deleveraging the real estate sector and preventing the economy from collapsing.
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