The Chinese real estate market collapsed in July with all indices falling. An expert predicts that the real estate plunge, together with the economic slowdown, will lead to a financial shortage of 6 trillion yuan (about $889.6 billion) for local governments for the year, as the local governments’ revenues from land sales may be halved this year.
Lu Ting, Nomura Securities’ Chief China Economist, penned an article on China’s top financial news outlet Caixin on July 24, pointing out that although China’s real estate sales improved in June, data in July showed that sales had once again declined. Even in June, home starts plummeted by 45 percent year-on-year, home completions fell 41 percent, land sales fell 53 percent by area and 65 percent by value.
According to a report released by Shanghai Securities on July 18, between July 4 and July 18, 3.923 million square meters of land for planned development were sold in 100 large and medium-sized cities, a cumulative year-on-year fall of 61.58 percent; and property sales in 30 large and medium-sized cities amounted to 2.42 million square meters, a cumulative year-on-year drop of 36.46 percent.
In terms of number of property sales, between July 4 and July 8, 6,237 units were sold in first-tier cities, a reduction of 36.16 percent, 9,458 units were sold in second-tier cities, a decline of 34.68 percent, and 6,040 units were sold in third-tier cities, a decrease of 43.31 percent.