Unsold housing stock in China’s 100 biggest cities rose to the highest in five years in November, according to a private sector survey, as weak demand in smaller centres added to headaches for the country’s property market.
Inventories expanded 2.1 percent at the end of last month from a year earlier to 521.10 million square metres, a report from E-house China Research and Development Institution showed on Friday.
The increase in November also marked the 36th consecutive month of on-year gains.
The Chinese property sector has slowed sharply this year, with sentiment shaken by tighter regulations and a liquidity crisis that has engulfed some of the country’s largest and most indebted developers.
In November, China’s new homes continued to face “supply exceeding demand” with 44.95 million square metres on the supply side and 34.37 million square metres in home transactions by volume, the Shanghai-based institution said.
“The biggest problem in current supply and demand is the prominent weakness in home transactions,” said E-house in its report.
The property woes have hammered smaller cities with persistent population outflows or uncertain economic prospects, leading to a build-up in local housing inventories.
New home inventories in tier-three and four cities stood at 224.87 million square metres, compared with 30.52 million square metres in tier-one cities, said the property research institution.
Yan Yuejin, E-house’s research director, expected home purchase policies to ease in December and the first quarter of 2022 in tier-three and four cities.
The property downturn is expected to spill into the first half of 2022, with home prices and sales falling as tight credit policies and a looming property tax dampen demand, a Reuters poll showed last week.
Moody’s in a recent note expected the government to take a gradual and cautious approach towards deleveraging the property sector and prevent a hard landing of the economy.