China’s unsold housing stock reaches its highest level in five years | Business and Economy

The Chinese real estate sector has slowed sharply this year amid a liquidity crisis and heightened regulatory oversight.

The stock of unsold homes in China’s 100 largest cities hit five-year high in November, private sector survey found, as weak demand in smaller centers worsened headaches for the housing market from the country.

Inventories rose 2.1% late last month from a year earlier to 521.10 million square meters, a report from the E-house China Research and Development Institution revealed on Friday.

The increase in November also marked the 36th consecutive month of year-over-year gains.

China’s real estate sector has slowed sharply this year, with sentiment reeling from tighter regulations and a liquidity crunch that has engulfed some of the country’s largest and most indebted developers.

In November, Chinese new homes continued to face “supply exceeding demand” with 44.95 million square meters on the supply side and 34.37 million square meters of real estate transactions by volume, said the Shanghai-based institution.

“The biggest problem with current supply and demand is the significant weakness of home transactions,” E-house said in its report.

Housing problems have hit small towns with persistent population exoduses or uncertain economic prospects, causing local housing stocks to build up.

Inventories of new homes in level three and four cities stood at 224.87 million square meters, compared to 30.52 million square meters in level one cities, the real estate research institute said.


E-house research director Yan Yuejin expects home buying policies to ease in December and the first quarter of 2022 in level three and four cities.

The real estate slowdown is expected to spread into the first half of 2022, with lower house prices and sales as tough credit policies and an impending property tax dampen demand, according to a Reuters poll last week.

In a recent memo, Moody’s expected the government to take a gradual and cautious approach to deleveraging the real estate sector and preventing a hard landing in the economy.

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