Chinese property company apologizes for vacancy rate report after public debate

By Liangping Gao and Clare Jim

BEIJING/HONG KONG (Reuters) – A Chinese real estate think tank owned by KE Holdings on Thursday apologized for sparking a “heated public debate” with its report on rising home vacancy rates in China, and said its assessment may not be accurate enough.

The apology comes at a time when policymakers are urging banks to lend to real estate companies and local governments are relaxing down payment rules for home purchases as sales and confidence falter amid weak macroeconomic conditions.

A growing debt crisis in the real estate sector, which accounts for a quarter of the world’s second largest economy, has also increased the risk of social instability.

The Beike Research Institute released a report Aug. 5 after conducting a survey warning of oversupply due to high vacancy rates in major Chinese cities.

According to the report, the average vacancy rate in 28 major cities is higher than in the United States, Canada, France, Australia and the United Kingdom, with a vacancy rate of 7% in Tier 1 cities, including Beijing, and 12% in Tier 2 cities .

However, a statement published on its WeChat account on Thursday said the methodology used resulted in inaccurate data.

“The survey takes as an indicator whether an apartment has been unoccupied for three months, which does not fully reflect the actual situation,” it said.

Issues highlighted included discrepancies in survey responses, sampling and procedures were not standardized enough, coverage was not as comprehensive, and some data was incorrectly collected.

“We will verify the accuracy of the data with the housing, water and electricity departments,” it said.

The report could worsen sentiment in the troubled housing market, where some cash-strapped developers have defaulted on loans and bond repayments and homebuyers in several cities have refused to pay their mortgages over unfinished homes.

Beike declined to comment further when contacted by Reuters. The report is no longer available on his official WeChat account.

China does not provide official data on housing vacancy rates, and researchers’ findings are mixed.

Southwestern University of Finance and Economics in Chengdu, Sichuan, said in a 2018 report that the housing vacancy rate in urban areas nationwide was 21.4% in 2017, up from 18.4% in 2011. She cited Data from their China Household Finance Survey and the National Bureau of Statistics.

Investment bank China International Capital Corporation Limited estimated the vacancy rate in urban areas at 12.1% in 2017 in a report.

She put the rate for non-village cities at 9.7%, which was “significantly lower” than mature markets like the United States and Japan.

Zhang Dawei, chief analyst at real estate agency Centaline, said the vacancy rate should be released by the government.

“It is impossible for a private institution to obtain genuine data, such data must be released with caution, which easily leads to market panic,” Zhang said.

A Tuesday Weibo post by financial news agency Yicai citing the report showed 56,000 likes and 6,017 comments in one day.

Others suggested that more needs to be done to bring prices down.

“The real estate market is in a state of deformity, resulting in ridiculously high prices and vacant homes in many places,” commented one netizen.

“If prices don’t go down, it will be difficult to increase people’s sense of harmony,” lamented another.

In another thread with the hashtag “Beike’s apologies for high vacancy rate,” which garnered over 38 million hits by the afternoon, a netizen said, “(Beike)has received a warning from the relevant authorities.”

(Reporting by Liangping Gao and Ryan Woo in Beijing and Clare Jim in Hong Kong; Editing by Jacqueline Wong)

Copyright 2022 Thomson Reuters.

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