China home buyers wait for better deals as developers see big drop in contracted sales in July amid economic slowdown

By Pearl Liu pearl.liu@scmp.com / https://www.scmp.com/business/article/3023543/china-home-buyers-wait-better-deals-developers-see-big-drop-contracted?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | September 11, 2019 11:57 AM SGT
Potential homebuyers in China are waiting on the sidelines, hoping for better deals.
New data suggests a break in prices might be coming.
In July, China's top 10 builders recorded a month-on-month fall of 80 billion yuan (US$11.4 billion) in total contracted sales, due to a combination of a slowdown in the economy and government policies to clamp down on their debt.
The biggest plunge among them was 58 per cent. The top 100 developers saw an average fall of 29 per cent.
The question is whether prices will begin to fall as well, as developers feel pressured sell lower to sell more. In the most recent government survey of 70 major Chinese cities, homes prices fell in only three of them.
"Amid a gloomy economy outlook, people are worried about their jobs, and are reluctant to set aside such a large amount of money and purchase a home. A further decline (of sales) in the coming months will be seen," said Yan Yuejin, research director at Shanghai-based property services company E-House China R&D Institute.
Zabb Zhao, 30-year-old bank employee, is among those betting prices will fall. He wants to buy in Shenzhen, one of the country's most expensive property markets that is home to Tencent Holdings and Huawei Technologies.
"It will cost my savings and that of my parents and I do not want to waste a penny," Zhao said. "New homes in other cities have started to offer discounts and I'd rather wait for another couple months."
Home prices in Shenzhen and five other cities were unchanged in July, according to data released by the National Bureau of Statistics last week. Prices rose in 61 cities.
Against this backdrop of a challenging environment for home buyers, China's property giants are feeling pressure as well.
Country Garden, the country's biggest home builder by sales, reported 41.9 billion yuan in sales attributed to shareholders. That was a 32 per cent drop in July compared to June. Billionaire Hui Ka-yan's...