Longfor Group sales plunge 48.7% as China property slump deepens

Longfor Group's May contracted sales fell to RMB3.32 billion, extending a year-long decline that underscores the depth of China's property downturn.

Longfor Group's May contracted sales tumbled 48.7 percent from a year earlier to RMB3.32 billion, the latest sign that China's property crisis continues to deepen despite repeated policy support measures from Beijing.

For the first five months of 2026, the developer's aggregated contracted sales reached RMB13.67 billion, down 52.1 percent year over year, according to a filing with the Hong Kong stock exchange. The company sold 298,000 square meters of gross floor area in May and 1.451 million square meters in the January-to-May period. Contracted sales attributable to Longfor shareholders amounted to RMB2.13 billion in May, with attributable GFA of 200,000 square meters.

"The persistent weakness in contracted sales across China's major developers suggests that policy easing has not yet translated into improved homebuyer sentiment," said a CLSA analyst, who noted that the brokerage expects tighter overseas investment rules to reduce Hong Kong home demand by 2 percent to 3 percent. The property sector's struggles have weighed on broader Chinese equities, with the Hang Seng Mainland Properties Index falling more than 15 percent this year.

The deepening sales contraction at one of China's few remaining private-sector developers that has avoided default highlights the structural nature of the property downturn. Longfor's cumulative sales decline of more than 50 percent in the first five months places it among the hardest-hit major developers. The company, which had been viewed as a relative safe haven among Chinese property firms due to its conservative financial management, is now grappling with the same demand-side pressures that have pushed peers such as Country Garden and Vanke into distress.

The property slump has persisted even as Chinese authorities have cut mortgage rates, relaxed home purchase restrictions and lowered down payment requirements over the past year. The last time China's property market experienced a contraction of this magnitude was during the 2014-2015 downturn, when annual sales fell about 8 percent — far less severe than the current cycle. In that period, the government's stimulus measures, including rate cuts and purchase restriction relaxations, took roughly 12 months to stabilize the market.

For Longfor, the sales decline pressures liquidity and debt servicing capacity. The company reported RMB83.8 billion in total debt as of December 2025, with RMB21.5 billion due within one year, according to its annual report. With monthly sales running at roughly half the pace of early 2025, the developer faces a widening gap between cash inflows and near-term obligations.

The outlook for China's property sector remains uncertain. With homebuyer confidence at multiyear lows and the economy growing at a subdued pace, analysts expect further sales weakness in the coming months. The government's ability to stabilize the housing market — a key driver of economic growth and local government revenue — will be tested as developers continue to report double-digit monthly declines. The next major data point will be June contracted sales, due in early July, which will show whether the spring selling season brought any relief.

This article is for informational purposes only and does not constitute investment advice.