BEIJING : The number of Chinese households that decided against buying a home soared in the fourth quarter of 2022, a private survey showed, as COVID infections and lockdowns sapped sentiment, while property foreclosures soared as the economy slowed.
But more households were considering buying a home or investing in other assets in the coming three months, according to the survey by a research institute and think tank under Ant Group and the Southwestern University of Finance and Economics released on Wednesday.
Stabilising the crisis-hit property sector will be a key challenge for policymakers this year as they try to kick-start an economic recovery. Much hinges on how quickly people will start spending again after the government abruptly dismantled its tough COVID restrictions in December.
The number of families opting to stay on the sidelines for property in the last quarter rose to 27.2 per cent of respondents from 20.1 per cent in July-October, the survey showed.
However, it also found 16.6 per cent of Chinese families had plans to buy a home in the coming three months, up from 7.0 per cent in the July-October quarter.
Respondents’ willingness to allocate money to domestic stocks, funds, and overseas asset classes also increased, the survey showed.
The quarterly survey of over 34,000 households focuses on changes in Chinese household wealth.
China’s real estate sector, once a key driver of the world’s second-largest economy, fell into a deep slump in 2022 as debt-ridden developers failed to finish stalled projects and some buyers boycotted mortgage payments. As a result, property investment and sales fell sharply, weighing on home prices.
Foreclosed properties reached 606,000 units last year, up 35.7 per cent from 2021, with the number of such properties finding buyers at auctions slumping 14.9 per cent on year, according to calculations from a separate survey by China Index Academy, one of the country’s largest independent real estate research firms.
Cities with high numbers of foreclosures were mostly in central and western China, as well as the prosperous Yangtze River Delta and Pearl River Delta regions, according to the property research firm.
A tentative revival was seen in the property sector in January, with home prices rising for the first time in a year, boosted by the government’ aggressive support measures late last year, lower mortgage rates and the u-turn on the “zero COVID” containment policy.
But analysts expect a sustainable recovery in the sector will only kick in towards the second half of this year.
In the poll by Ant Group’s institutions, the overall debt of Chinese families and all types of debt increased significantly in the fourth quarter and were at higher levels than in the year-earlier period.
The survey also showed demand for consumer loans increased in the fourth quarter, although low interest rates on consumer loans have led many home buyers to use the funds to pay off their existing mortgages in advance.