China’s Home Sales Slump Persisted in May During Lockdowns

May 31, 2022

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(Bloomberg) -- China’s home sales slump persisted in May as Covid outbreaks in key cities overshadowed efforts to revive buyer confidence.

The 100 biggest real estate developers saw new-home sales plummet 59% in May from a year earlier, according to preliminary data from China Real Estate Information Corp. The drop matched April’s decline as the biggest this year. 

The figures are another blow for the embattled property sector, which has been hit by strict coronavirus lockdowns and a liquidity crisis among developers. Under pressure to halt an economic slowdown, Chinese authorities stepped up efforts in May to salvage the residential market by urging banks to lend more, lower mortgage costs and ease rules on owning multiple properties. 

The property industry’s debt woes have been spreading to stronger firms as weaker sales hurt cash inflow. State-backed Greenland Holdings Corp. last week shocked investors by seeking to delay repayment on a dollar bond, spurring a broader selloff among higher-rated companies like Country Garden Holdings Co. 

“Property sales will remain weak, although the magnitude of the decline in sales will gradually narrow over the second half of 2022,” Moody’s Investors Service analysts including Yulia Wan wrote in a May 31 note. “Tight liquidity and weak sales will result in more property developers running into financial difficulties.”

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