China's property troubles aren't getting better, intensifying calls for bolder policy help

cnbc.com:

China's real estate troubles are accelerating. Prospective home buyers are holding back on making purchases, leading to weak sales that compound the urgent need for policymakers to step up support for the industry.

New home sales for the top 100 developers dropped by about a third in June and July from a year ago, after double-digit growth earlier in the year, said Edward Chan, a director at S&P Global Ratings. With most apartments in China sold before they are completed, weak new home sales will likely lead to significant cash flow issues for developers.

«We think the situation is probably getting a little bit worse because of this Country Garden incident,» Chan told CNBC in a phone interview Thursday. He added he hasn't seen any improvement in new home sales so far.

At a time when rafts of data are pointing to a rapidly slowing economy, this lack of improvement, along with Country Garden's looming default, is making it more difficult for property developers to raise funds.

Late Thursday in the U.S., the world's most indebted property developer Evergrande filed for bankruptcy protection, further shaking up investor confidence.

The deepening crisis of confidence is adding to pressure on the world's second-largest economy.

China's real estate sector is estimated to directly and indirectly account for up to a quarter of economic activity in the mainland. JPMorgan raised its global emerging markets corporate high-yield default forecast on Tuesday, largely due to rising contagion fears in China's property sector from a possible Country Garden fallout.

Country Garden, China's largest non-state-owned developer by sales, has less than 30 days to make coupon payments it missed Aug. 7 on two dollar bond coupons worth $22.5