Following are the key points related to the sector, a major driver of economic growth:
SALES AND RANKING
National home sales by floor area in the first 11 months shrank 23.3% from a year earlier, while home prices dropped 1.6%, according to the latest official data.
Sales are expected to slip a median of 8% in 2023, according to eight economists and analysts surveyed by Reuters.
Despite the sharp sector-wide slump, state-owned players generally did not fare as badly as their private peers as they had more capital to complete construction and homebuyers had more trust in them.
According to S&P Global estimates, sales of state-backed developers dropped 25% in the first 10 months, compared to 58% for private firms.
While Country Garden remained the leader in national sales by value and the only private developer in the top five, state-backed developers dominated the rest of the rankings. Debt-laden Sunac China and Evergrande Group dropped to No. 11 and 34, respectively, from No. 3 and 5 last year, according to real estate information provider CRIC.
The trend is set to continue in 2023, with state-owned players further controlling the polarized property market as many private developers struggle to raise fresh capital, it said.
UNCOMPLETED HOMES AND UNSOLD HOMES
In July, a growing number of homeowners across the country threatened to stop repaying mortgage loans to protest against unfinished homes, adding to worries over a prolonged slump in China's property market, a deterioration in banks' loan books and the risk of possible social unrest.
Over $40 billion worth of loans could be at stake if all unfinished projects end up in mortgage boycotts, representing 6% of total mortgages, Natixis said at the time.
The rare act of public disobedience prompted Chinese authorities to quickly investigate the oversight of funds by developers and banks. They set up bailout funds and special loans and relaxed the escrow accounts for developers to ensure homes were completed and delivered.
Homes which have been completed but remain unsold are also a problem in China, with Rhodium Group estimating inventory at 2.4 billion square kilometres, around the size of Luxembourg.
Shadow inventory - unoccupied houses that people bought on price expectations - could be even bigger at 3.8 billion sq/km, Rhodium said, around 13% of the total housing supply.
According to CRIC, many of the 30 major cities recorded higher inventory in November than a year earlier, and cities like Dalian and Chengzhou required over 50 months to clear inventory.
For the top-tier cities, it would take 19.4 and 26.4 months for Beijing and Guangzhou to clear their stocks, respectively, and 5.2 and 16 months for Shanghai and Shenzhen.
SHARES AND BONDS
Hong Kong's Hang Seng Mainland Properties Index plunged 43% in 2022, lagging a 15% decline in the benchmark Hang Seng Index.
For dollar bond prices, many were already trading at distressed levels by the end of 2021 after a series of Chinese developer defaults, but they sank further to single digits in the second quarter as the crisis deepened.
Share and bond prices have recovered much of their ground since November after regulators rolled out measures to bolster the sector's liquidity, among other support steps.
Sentiment among hedge funds and onshore long-only funds turned slightly more positive after the policy change, JP Morgan said in a report in December, while offshore long-onlys were still generally cautious.
OFFSHORE DEBT AND RESTRUCTURING
2023 will see a high wall of offshore bond maturities totalling $141 billion, after $120.7 billion in 2022, data by Refinitiv show. The figure represents the amount at issue and does not reflect redemptions and defaults.
Most private developers are undergoing a debt restructuring, while many are also faced with winding-up petitions offshore by their creditors. A few more defaults are expected in the first quarter.
Among them, China Evergrande Group, the world's most indebted developer which is at the centre of this debt crisis, is aiming to win creditors' approval for its debt restructuring proposals as early as end-Feb.
BORROWINGS
Real estate firms' domestic loans dropped 27% in the first 11 months, while self-raised funds that include asset securitization, trust and private equity funds decreased 17.5%.
The drops came amid repeated calls by regulators to banks to satisfy the "reasonable" capital demand of developers.
Now the market expects developers' liquidity will improve after a policy turn and "rescue package" by Beijing in November. But these policies mostly benefit only higher quality and leading developers.
Thus, many analysts expect a recovery in China's property sector to be a bumpy and lengthy one.
(Reporting by Clare Jim; Editing by Anne Marie Roantree and Kim Coghill)
By Clare Jim
