Chart of the Day: Virus Sends February Home Sales Through the Floor

The property sector is one of many taking a major hit during the Covid-19 outbreak, as showrooms and sales offices remain largely shuttered under government orders to prevent the virus’s spread.

New home sales suffered one of their worst months on record in February as the virus peaked in China and many chose to stay at home rather than property shop. Chinese property developers saw their sales plunge 38% in February compared with the same month a year earlier, based on the average from a list of the nation’s 100 largest companies compiled by real estate data collector CRIC.

The latest data show that smaller firms are getting hit more than the larger ones. But everyone is suffering after local governments ordered the shuttering of sales offices that are the primary place where most deals for new homes are negotiated and signed.

Among the top 20, leading developer Evergrande was the lone company to record a gain in February, with sales more than doubling from a year earlier. But that happened only after it launched an aggressive promotion midway through the month, offering hefty 25% discounts at 613 of its properties.

In the face of bans on their brick-and-mortar sales offices, many companies have turned to online showrooms to try and make up some of the shortfall. CRIC found that of the 100 top developers, 92 are now operating online sales offices.

Local governments have also been trying to assist with measures like allowing construction to resume at some worksites, lowering fees and allowing delayed payments for land purchases. Some smaller cities are also taking steps to entice buyers, such as offering subsidies and tax reductions, and lowering down payments requirements.

The disruption is putting a huge strain on developers, especially smaller ones that are dependent on having the steady cash flow of property sales to fund their operations. Many such smaller developers could face major difficulties if the situation isn’t resolved within three months, said Wu Jianbin, a vice president at developer Yango Group.

Contact reporter Yang Ge (geyang@caixin.com)