China's unsold housing stock soars 190pc over four years

The mainland's inventory of unsold housing stock has soared 190 per cent over the past four years, in a further sign that the downturn in the property market is deepening.

Unsold residential floor space rose to 561.6 million square metres by the end of August, 1.68 per cent higher than at the end of July, National Bureau of Statistics data showed. The increase extends to 29 months the growth in unsold stock, which will take 10 months to clear based on property sales volumes last month.

The relentless expansion in housing stock yet to find buyers has been attributed to growth in property investment, land supply and housing construction over recent years.

Although local governments across the mainland have eased restrictions on the purchase of second homes, Centaline China research director David Zhang said such measures had limited impact in restoring buyer confidence. "The banks have to relax the conditions on property loans," he said. "Otherwise the property market will not recover."

The government relaxation of home purchase restrictions had no impact on property sales, added Du Jinsong, an analyst at Credit Suisse. "The policy is aimed at curbing property investment demand and speculation. But now, people are hesitant in buying flats because property prices are falling," he said.

Zhang said that first-tier cities still suffer from a lack of housing supply. "But property sales are not active because the prices are already beyond buyers' budgets. The second to fourth-tier cities are facing the problem of oversupply," he said.