Source: Financial Times —
Since the end of China’s zero-Covid policy late last year, property broker Wu Hong is so busy chasing new leads that she no longer has time to sit around playing cards with her colleagues. “Now I spend so much time talking to clients that I often feel pain in my throat,” said Wu.
But her hard work is not translating into sales. Sales of newly built homes in Wuhu, a city in eastern China about 300km from Shanghai, were up 10 per cent last month from 448 properties in December. But they remain down almost two-thirds from the 1,341 properties sold in January 2022.
The tepid real estate recovery in Wuhu underscores the challenges for Chinese policymakers to stimulate the country’s property market, a critical growth engine that has floundered over the past two years under a government crackdown and Covid-19 controls.
Even by the standards of other Chinese cities, Wuhu has an abundance of unsold homes, a person briefed on the matter said.
“Homebuyers are back,” said an executive at a developer with projects in Wuhu. “But they are more cautious in making decisions for fear that prices, which have been softening, will decrease further.”
China’s real estate sector is estimated to account for about 30 per cent of total economic output and is closely tied to the finances of local governments, which last year made Rmb6.7tn ($990bn) — or a third of total fiscal revenue — from land sales to developers.
But government restrictions on high levels of leverage in the sector intended to limit speculation and risky lending — known as the “three red lines” policy — have starved developers of cash, driving some into default, freezing projects and sending house sales and prices plunging.
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