China Real Estate Companies' Revenue Halved in the First Half of the Year

A road scene in Shanghai, China, last April. Photo by Yonhap News Agency

[Asia Economy Reporter Moon Hyewon] Sales of Chinese real estate companies in the first half of this year were found to be only half of the same period last year.

On the 3rd, economic media Caixin cited statistics from market research firm CRIC, reporting that the contracted sales amount of the top 100 Chinese real estate companies from January to June was 3.47 trillion yuan (approximately 671 trillion won), a 50.7% decrease compared to the same period last year.

Caixin pointed out, "Since the second half of last year, the real estate slump has continued, and although some companies lowered their targets for this year, the overall achievement level for the first half remains low," adding, "This means that the pressure these companies face in the second half will increase further."

The severe slump in the Chinese real estate market, estimated to account for about 30% of the Gross Domestic Product (GDP), has been one of the main causes of China's rapid economic slowdown since the second half of last year.

The Chinese government, which froze the real estate market with high-intensity regulations under the slogan of 'Common Prosperity,' has recently shifted its policy toward easing real estate regulations to stabilize the economy and has introduced various support measures, but the market situation is not improving easily.

As major real estate companies such as Hengda have triggered massive defaults, consumers are increasingly hesitant to purchase new homes, fearing that construction might be halted after paying the pre-sale price, resulting in financial losses. Also, although there has been no sharp plunge, housing prices are gradually declining mainly in small and medium-sized cities, causing many Chinese people to worry about further drops.

The continued slump in China's real estate market is also confirmed by official Chinese statistics. From January to May, the sales area of real estate in China decreased by 23.6% compared to the same period last year. Sales amount during the same period also dropped by 31.5%.

In May, housing prices in 70 major Chinese cities fell by 0.17% from the previous month, marking the ninth consecutive month of decline.