China's real estate sector faced a significant setback during the recent May Day holiday period, with average daily home sales plummeting by 47% compared to the previous year, according to a private survey released on Monday. The data, compiled by the China Index Academy, indicates a worrying trend of declining demand in the housing market, prompting calls for urgent policy interventions to stabilize the industry.
Of the 22 cities surveyed, home sales dropped in 19, with major urban centers such as Guangzhou and Shanghai experiencing particularly steep declines exceeding 60%. This contraction underscores the challenges facing the property market and the need for targeted measures to revitalize sales and restore investor confidence.
Despite efforts by Chinese authorities to bolster the sector, including discussions at politburo meetings to address housing inventory issues, analysts remain skeptical of the efficacy of current policies. Many argue that a more comprehensive approach, involving adjustments to downpayment ratios, mortgage rates, and transaction taxes, is necessary to stimulate demand effectively.
"The current policy measures, while well-intentioned, may not be sufficient to reverse the downward trend," cautioned a spokesperson from the China Index Academy. "Additional interventions are needed to restore market confidence and incentivize purchasing activity."
In response to the downturn, local governments have begun implementing targeted measures to stimulate demand and alleviate pressure on the housing market. Initiatives such as the relaxation of home purchase restrictions in Chengdu and the introduction of optimized measures in Beijing signal a shift towards more regionally focused strategies.
Looking ahead, analysts anticipate a continuation of policy easing efforts and increased government intervention to stabilize the housing market. Measures such as the acquisition of housing stock by local governments for conversion into subsidized units are expected to play a pivotal role in addressing both supply-side imbalances and affordability challenges.
