In China, more families are debating whether to purchase a house, and foreclosures are threatening the industry.
(Reuters) – Beijing According to a private poll, the number of Chinese families that opted against purchasing a home increased in the fourth quarter of 2022, as COVID infections and lockdowns drained moods and property defaults increased as the economy declined.
However, more families were contemplating purchasing a property or investing in other assets in the next three months, according to a poll published on Wednesday by Ant Group’s research centre and think tank and the Southwestern University of Finance and Economics.
Stabilizing the crisis-ravaged property sector will be a major task for officials this year as they attempt to jump-start the economy. Much depends on how fast individuals resume spending after the government suddenly lifted COVID restrictions in December.
According to the poll, the number of families who decided not to buy a home in the last quarter increased to 27.2% from 20.1% in July-October.
However, it was discovered that 16.6% of Chinese households planned to purchase a property in the next three months, up from 7.0% in the July-October quarter.
Respondents’ readiness to devote money to domestic stocks, funds, and foreign asset classes also grew, the poll revealed.
The quarterly poll of over 34,000 Chinese households centres on shifts in family wealth in China.
China’s real estate sector, once a major driver of the world’s second-largest economy, is expected to enter a severe slump in 2022 as debt-ridden developers fail to complete delayed projects and some purchasers refuse to make mortgage payments. As a consequence, property investment and sales have plummeted, putting downward pressure on house prices.
According to calculations from a separate survey conducted by China Index Academy, one of the country’s largest independent real estate research firms, the number of foreclosed properties reached 606,000 units last year, up 35.7% from 2021, with the number of such properties finding buyers at auction falling 14.9% year on year.
According to the property research company, cities with a high number of foreclosures were mostly in central and western China, as well as the prosperous Yangtze River Delta and Pearl River Delta areas.
The property sector experienced a tentative revival in January, with house values increasing for the first time in a year, bolstered by the government’s strong support measures late last year, reduced mortgage rates, and the reversal of the “zero COVID” containment policy.
However, analysts believe that a sustained recovery in the industry will not occur until the second half of this year.
According to Ant Group’s institutions, Chinese families’ total debt and all kinds of debt grew considerably in the fourth quarter and were at higher levels than the previous year.
According to the poll, demand for consumer loans rose in the fourth quarter, despite the fact that low interest rates on consumer loans have caused many homebuyers to use the funds to pay off their existing mortgages ahead of schedule.
