With China's Evergrande Group in trouble, the sales of major Chinese developers fell last month, putting more pressure on the real estate industry.
China Real Estate Information Group said in a report that the contracted sales of China's top 100 real estate companies in September fell 36% from the same period last year to 759.6 billion yuan, deepening the downward trend that appeared in July. According to the report, the sales of more than 90 developers have fallen from a year ago, and 60% of the developers’ sales have fallen by more than 30%.
"Shanghai Securities News" quoted a real estate consulting company manager as saying in a report that under current market conditions, real estate companies need to speed up development, ensure supply, strengthen marketing, and accelerate sales in order to Cash back in the fourth quarter.
"In the medium and long term, reducing leverage is still the focus of real estate companies." He added.
China's efforts to cool the real estate market and control financial risks have led to a decline in real estate demand in the past few months. The company that develops high-end residential and urban renewal projects Fantasia Group defaulted on US dollar bonds earlier this week, renewing investor concerns about highly leveraged borrowers.
Chinese real estate stocks fell on Friday, and after the suspension of trading of Fantasia bonds, investor concerns about developer liquidity intensified. In the mainland stock market, the index tracking the stocks of real estate developers fell 1.4%, while the Hong Kong Hang Seng Property Index fell as much as 1.3%.
Real estate developers' renminbi-denominated bonds also fell on Friday. According to the Bloomberg Index, China’s junk-grade offshore bonds ushered in their worst week since March 2020, with a yield of 16.9% on Thursday. According to bond traders, these debts fell as much as 2 cents on Friday morning.
September has always been the peak season for residential sales in China, but the trend of slowing down last month has deepened. According to the report, sales in 28 Chinese cities fell by 25% year-on-year in September.In Shanghai, the financial center, sales fell by 45%, while Beijing, Shenzhen and Guangzhou fell by 30%.
reported that the financing costs of the top 100 developers also increased in September, up 0.61 percentage points from the previous month, and 0.16 percentage points from the same period last year, reaching 5.55%.
According to official data, the value of domestic home sales has fallen by 20% in August compared with the same period last year, which is the biggest drop since the outbreak of the coronavirus at the beginning of last year.
"Looking forward to the fourth quarter, we believe that companies will maintain active marketing and sales strategies, and may provide deeper discounts to promote sales." China Real Estate Information Group said in the report.
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