China's home sales about to fall off a cliff as coronavirus forces shutdown in sales offices
By Iris Ouyang iris.ouyang@scmp.com
/ https://www.scmp.com/business/article/3048947/chinas-home-sales-about-fall-cliff-coronavirus-forces-shutdown-sales?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp |
China's residential property market has come to a standstill as sales offices are ordered to shut amid the coronavirus outbreak. Some agents are bracing for a slump in sales of as much as 80 per cent this month.
"We sell 200 to 300 lived-in homes on the secondary market but now we basically have zero transaction," Wang, a Shenzhen-based agent with one of China's largest real estate agencies, said by phone. He declined to give his full name. "Even if you want to view, most housing estates have barred visitors from their grounds."
The agency focuses on the Futian district in Shenzhen, where non-essential businesses have been told not to reopen their doors before February 10. Similarly, authorities in at least 60 cities have banned sales offices from opening their doors to the public, according to China Real Estate Information Corp, a Shanghai-based property research and consulting firm.
Chinese vice-premier Sun Chunlan, who leads a central government group to guide the epidemic control work in Hubei Province, inspects Huoshenshan Hospital in Wuhan on February 2. Photo: Xinhua
China has locked down Wuhan and other cities in the central Hubei province where the virus originated. The outbreak has claimed at least 426 lives and infected more than 20,000 worldwide, mostly in mainland China. The cases have now surpassed the count during the Sars (severe acute respiratory syndrome) outbreak in 2003.
Property sales fell 0.1 per cent in 2019 to 1.72 billion sq m, according to National Bureau of Statistics. They rose by 6.5 per cent in value terms to 15.97 trillion yuan (US$2.28 trillion). Average new home prices in 70 major cities rose 0.3 per cent in November from October, the smallest gain in almost two years.
Falling home sales will add to China's economic gloom this quarter, with some analysts forecasting about 5 per cent expansion rate as factories and businesses across many industries face temporary closures. The world's second-largest economy grew 6.1 per cent last year, the slowest since 1990.
Yan Yuejin, director of property research and data provider E-house China R&D Institute, said transactions in cities in Hubei province could decline by 50 per cent to 80 per cent this month.
"It could be nearly zero transactions in some places," Yan added. "Other provinces such as Zhejiang, Guangdong, Henan could also see a relatively large drop, as they have more infected cases. The opening time for sales offices there could be further postponed."
The viral outbreak will knock back home buying demand. The coronavirus crisis may last for several months, using the Sars episode as a reference, according to S& Global Ratings. Nationwide residential sales are at risk of a contraction, compared to its initial forecast for a 0-5 per cent gain, it added.
Sales forecasts rolled out by some developers of about 10 to 20 per cent higher than 2019 now appear to be optimistic, even though they have already dialled back from the 20 per cent to 50 per cent range set in previous years, S&P said.
"Given it is still unknown on how bad the virus outbreak would be, we believe developers would turn cautious and slow down their project launches in the following couple of months," Stephen Cheung, an analyst at Jefferies, wrote in a February 3 research note.
More local governments especially in low-tier cities could further relax their property policies to boost public land sales. China's central bank may also lower interest rates to cushion the economic slowdown, Cheung said in the report.
Several property agents based in major Tier-1 cities, such as Beijing, Shanghai, Guangzhou and Shenzhen, are optimistic about the sales outlook once the viral outbreak is contained, despite not having much business on hand at the moment.
Shang, a Beijing-based real estate broker who only wanted to be identified by his surname, said despite dwindling sales since the viral outbreak, his prospective clients are still making enquiries, while online viewership of home projects is also increasing.
Zhang Dawei, chief analyst in Beijing at Centaline Property, said transaction volume could further shrink by 50 per cent in March as it will take time for buyers to brave the crisis.
"In this market, people are just not interested in home purchases at the moment because this is a life and death situation," he said. "All people care about now is the spread of coronavirus."
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
Follow Us
Follow our channels to receive property news updates 24/7 round the clock.
EdgeProp Telegram
EdgeProp FacebookSubscribe to our newsletter
Top Articles
Search Articles