China's October New Home Sales Down 32% Year-on-Year... Concerns Over Economic Slowdown

[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Suhwan] Last month, the number of new home sales in China decreased, leading to analyses that the Chinese real estate market has entered a contraction phase.

Concerns have arisen that risks could spread throughout the Chinese economy as a whole.

According to Bloomberg News on the 1st, the local Chinese market research firm China Real Estate Information Corporation (CRIC) released a report stating that the number of new home sales by the top 100 real estate companies in China last month plummeted by 32% compared to the same period last year.

In the report, CRIC predicted that the real estate market is unlikely to improve in the short term and is expected to experience a downturn until the end of the year.

This contraction in the real estate market comes amid the escalating default crisis of Evergrande Group, China’s second-largest real estate company.

It is analyzed that Evergrande Group’s bankruptcy crisis, caused by debts exceeding 300 trillion won, is creating a chain reaction throughout the real estate market.

In fact, with the sharp decline in home sales, concerns are growing that the profitability of real estate companies already facing liquidity crises will worsen further.

Additionally, as the Chinese government has expanded loan regulations and made debt refinancing (replacing existing debt with new debt) more difficult under the pretext of resolving the real estate bubble economy, the industry’s means of securing cash have effectively been exhausted.

Already, four real estate companies declared default just last month.

With the third-quarter economic growth rate recording 4.9%, the lowest in a year, Bloomberg News reported that the real estate market downturn could act as a pressure factor on the Chinese economy.

This content was produced with the assistance of AI translation services.