The real estate market has been under pressure since the pandemic broke global markets. Experts claimed that the property industry's scale, long industry chain, and a huge influence on China's national economy, credit system, local finance, and employment must be given attention. The current postponement of home deals was also revealed to threaten capital flows of real estate companies in China.
A member of the China Finance 40 Forum Deng Yangmei and a researcher at the Chinese Academy of Social Sciences Xu Qiyuan suggested that the real estate market in China deserves due attention during the pandemic.
They claimed that the real estate market has been under pressure since the start of the pandemic and that the property industry deserves special attention from the government given its scale, a huge influence on China's economy, credit system, local finance, and employment, and its long industry chain.
The experts shared data from the public domain that manifested residential property developers' status such as the threat of sales standstill for the rest of 2020. Most cities in China experienced significant declines in new and pre-owned home transaction volumes based on annual values from January 24 to February 19 of 2020 compared to figures generated last year.
Since the imposition of the lockdown in Wuhan, some developers have reported a significant drop in real estate deals that threaten capital flows in the market. Wind Info monitored that new home transaction volumes dropped by 80.8 percent during the last week of January in 30 large and medium-sized cities in China. The figures dipped as much as 97.3 percent during the first week of February as well. Despite the growing number of people returning to their work stations, home sales remained at low levels.
The experts then claimed that the Chinese government's ability to control the adverse effects of the virus would significantly mirror the recovery process of home sales. They also claimed that the postponement of home deals for the rest of 2020 would be the greatest challenge to capital flows of real estate companies operating in China. They also perceived that some real estate developers might put their residential projects for public purchase to ease off their credit troubles.
They also suggested that since the tightening of housing policies in China in 2017, financial institutions reduced the size of credit lines offered to real estate enterprises. The imposition was to prevent excessive capital flows into the overheated industry. They then claimed that property developers are over-pressured during the crisis and are threatened with the drop of sales in the industry that could significantly affect the nationwide economy if left unattended.
