In small Chinese cities, unsold housing stock hits highest since 2019

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BEIJING: According to a report by an independent consultancy, the stock of new housing in small Chinese towns reached its highest since 2019 in late August, amid fragile demand in the country’s trampled real estate market.

According to China Real Estate Information Corp (CRIC), which monitors 100 Chinese cities, the number of unsold new homes in third- and fourth-tier cities rose 5 percent at the end of August from a year ago.

It currently took developers about 23 months to sell a new home across the country and more than 50 months in some small towns, CRIC said in a report published Wednesday.

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Small towns generally account for about half of all unsold new homes in China. CRIC declined to comment on Reuters’ request for more details.

China’s real estate market has seen repeated crises since 2020, and the problems worsened in August as a mortgage boycott and developer financial tensions further undermined confidence in the sector, data showed earlier this month.

Prices were dragged down by weak demand in smaller cities amid continued slow deliveries from heavily indebted developers, the data showed.

Developers in second-rate cities, including some provincial capitals, also struggled to find buyers, the CRIC report found, and it took them about 18 months to sell homes.

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The eastern city of Qingdao and the central city of Wuhan each reported more than 20 million square meters of unsold new housing stock, more than the cities monitored by the CRIC.

While the number of unsold new homes rose 13 percent year-on-year in August in top-tier cities, where developers tend to launch new projects, it took nearly 13 months for new homes to sell in cities such as Beijing, Shanghai, Guangzhou and Shenzhen, it said. CRIC.

Nationally, according to the CRIC, the housing stock rose by 3 percent to 587.2 million square meters. That is the equivalent of about 6.5 million typical Chinese houses of 90 square meters each.

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The housing stock has been on the rise since at least mid-2020, when policymakers began to intervene to reduce developers’ excessive debt.

According to data from the Chinese Statistical Office, there were 6.1 billion square meters of housing projects under construction in August.

The market will continue to bottom, with home sales likely to fall in the traditional September buying season, the CRIC said.

“Total inventories are likely to maintain an upward trend,” it said.

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