In the first half of 2024, China experienced a significant 21% decline in new home sales by floor area, signaling a cooling in the once-booming market. Pre-sales have dropped by 30%, while post-completion sales have increased by 20%, reaching over 20% of all new property sales by value, the highest level since 2006.
This shift is reshaping the real estate sector in China, traditionally reliant on pre-sales for development funding. However, the recent downturn has caused a liquidity crisis among developers, leading to construction delays and buyer reluctance to fulfill mortgage commitments.
Guangzhou’s Public Housing Policy Shift
In Guangzhou, a new policy transitioned all public housing sales to post-completion, aiming to boost consumer confidence. This adjustment in sales strategy may become more common across China, enhancing buyer security but prolonging developers’ investment recovery periods.
Despite efforts to stabilize the market, home prices in most major cities have continued to decline, reflecting broader economic challenges. The evolving landscape poses profound implications for the real estate sector and the economy, emphasizing the importance of a cautious approach for developers and policymakers.