China’s Home Sales Slump Eases in June After Support Measures

Bloomberg News, Bloomberg News

A Chinese flag flies at a public housing estate to mark the 25th anniversary of Hong Kong's return to Chinese rule in Hong Kong, China, on Wednesday, June 22, 2022. The rising number of Covid cases in Hong Kong has caused some unease before the July 1 handover anniversary marking 25 years since Britain returned the city to Chinese control. Photographer: Paul Yeung/Bloomberg , Bloomberg

(Bloomberg) -- China’s home sales slump eased for the first time this year as stepped-up supportive measures by local governments started to attract more buyers.

The 100 biggest real estate developers saw new-home sales slide 43% in June from a year earlier to 733 billion yuan ($109 billion), according to preliminary data from China Real Estate Information Corp. Compared with last month’s, however, their sales climbed 61.2%.

China’s debt-saddled private developers face growing risks from a liquidity crunch with homebuyers’ shattered confidence. The 100 developers’ sales slumped 50.3% in the first half of 2022, the data shows.

Signs of improvement in the housing market have emerged after local governments eased buying curbs, cut mortgage rates and partially relaxed ownership rules. The chairman of one of China’s biggest property companies said earlier this week that the home market has bottomed out, adding that the recovery will be a slow process.

Some residential builders have resorted to gimmicks such as accepting wheat and garlic as payment to entice farmers as buyers.

The pace of the housing-market recovery is crucial for some embattled developers. Chinese builders have been driving record offshore bond defaults this year. The risks are now spilling into the onshore market.

China’s fourth-largest developer Sunac dodged a local-bond payment miss Wednesday after receiving approval to tweak an installment plan.