China's unsold housing stock soars 190pc over four years
Unsold home floor space rose to 561m square metres last month, extending growth of excess stock to 29 months
The mainland's inventory of unsold housing stock has soared 190 per cent over the past four years, in a further sign that the downturn in the property market is deepening.
Unsold residential floor space rose to 561.6 million square metres by the end of August, 1.68 per cent higher than at the end of July, National Bureau of Statistics data showed. The increase extends to 29 months the growth in unsold stock, which will take 10 months to clear based on property sales volumes last month.
The relentless expansion in housing stock yet to find buyers has been attributed to growth in property investment, land supply and housing construction over recent years.
Although local governments across the mainland have eased restrictions on the purchase of second homes, Centaline China research director David Zhang said such measures had limited impact in restoring buyer confidence. "The banks have to relax the conditions on property loans," he said. "Otherwise the property market will not recover."
The government relaxation of home purchase restrictions had no impact on property sales, added Du Jinsong, an analyst at Credit Suisse. "The policy is aimed at curbing property investment demand and speculation. But now, people are hesitant in buying flats because property prices are falling," he said.
Zhang said that first-tier cities still suffer from a lack of housing supply. "But property sales are not active because the prices are already beyond buyers' budgets. The second to fourth-tier cities are facing the problem of oversupply," he said.
The August figures indicate that the completion of private homes continued to increase over the past five months, further hitting a market plagued by low sales volumes.
Data from the bureau shows around 570.94 million sq m of private residential floor area were sold from January to August, 10 per cent less than a year ago. The property sales amount was 3.43 trillion yuan (HK$4.3 trillion) during the same period, 10.9 per cent less than the amount in the previous year.
Home seekers were affected by tightened property loan terms and the reluctance of banks to relax those conditions.
The bureau said investment in the property industry across the country reached 5.89 trillion yuan in the first eight months, still 13.2 per cent higher than a year ago. Residential development is still the most popular investment for developers. About 68.1 per cent of investment in the property market is for residential development, up 12.4 per cent from a year ago.
Investments in office and retail development grew 18.7 per cent and 22.9 per cent year on year to 338.4 billion yuan and 881.3 billion yuan, respectively.