Property sales and real estate investment in China continue to dwindle. Now some experts expect the situation will last longer than expected, with some smaller developers folding altogether.
Liu Wenwei, an economic planner, said sales of commercial homes totaled 277 million square meters nationwide in the first 7 months this year. The number is down nearly 11% from last year. And the growth rate is 37.2 percentage points lower than a year ago.
The amount of completed residential or existing homes is down 18% in terms of area, from a year ago. And the number of pre-sale residential homes is down nearly 8%.
Nie Meisheng, Chairwoman China Real Estate Chamber of Commerce, said, ‘China’s property sector is experiencing typical stagflation at the moment. Trading is declining, which also drags down investment. While real overall housing prices in the country are actually growing.’
Property investment has also slowed in China since the middle of the year. Figures from the National Development and Reform Commission show that during the first 7 months this year, Chinese developers bought 5% more land use right, year on year. But the growth rate declined 6.7 percentage points from a year ago. Land use right purchases in July alone dipped by 28%.
Nie Meisheng said,’Developers are very cautious now when taking land use right. One of the reasons is they have no clues as to what the market will look like in 2009. Another reason is that it will take them more time to balance their cash flows.’