Chinese property stocks at their lowest since 2009 as the crisis continues to unfold

The Chinese post-pandemic recovery continues to be under threat as the country’s leading real estate companies face a potential collapse and investments in property hit a 9-month low.

The latest Chinese government data shows that for the first nine months of the year, local property investments dropped by 9.1%. Chinese property stocks are at their lowest since 2009.

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Chinese real estate mega-giants Evergarande and Country Garden are both in debt. On Thursday, Country Garden missed a $15 million coupon repayment, according to Reuters, based on the information obtained from their sources. The company is now closer than ever to default, a fate that has already met many Chinese big real estate companies.

Evergrande also continues to remain in the centre of the country’s real estate sector-based crisis, with their shares falling more than 5% on Friday.

Reuter’s National Bureau of Statistics-based calculations show that Chinese new home prices are down 0.2% in October, but the drop has lessened since the month-on-month decline that saw August’s new home prices drop by 0.3%.

According to the National Bureau of Statistics of China, the property crisis continues to be fueled further by a lack of investment in the construction of new homes.

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Property developers say that, following a short-term increase in sales in Beijing and Shenzhen earlier this year, the market is once again stagnant, as many first-time buyers prefer to stay on the sidelines in this uneasy climate.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said that “Chinese economic data is relatively upbeat apart from property sales and investment, and it’s this differentiation that’s causing alarm bells to ring. The uncertainty surrounding the sector is reverberating in markets, and investors are watching for signs of support measures from the government.”

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