Key Takeaways:
The developer's worst half-year sales in recent memory underscore how China's property downturn continues to erode even the sector's most resilient players.
Longfor Group Holdings Ltd. reported first-half 2026 contracted sales of RMB16.55 billion, down 52.7% from a year earlier, as China's prolonged real estate slump deepened further into its fifth year. The developer's June sales alone totaled RMB2.88 billion, a 55.4% year-over-year decline that accelerated from the roughly 50% drops recorded in the preceding months.
"The magnitude of Longfor's sales contraction reflects a structural collapse in homebuyer confidence that no amount of policy easing has been able to reverse," said Wang Xia, a property analyst at Guotai Junan Securities. "Even developers with strong balance sheets are now seeing demand evaporate."
The company's 1H26 figure of RMB16.55 billion compares with RMB35 billion in the same period last year, marking the lowest half-year total since at least 2020. The June decline of 55.4% was steeper than the 52% drop in May and the 48% fall in April, suggesting the downward trend is accelerating rather than stabilizing. Longfor, long considered one of China's healthier private developers alongside Country Garden Holdings Co., has seen its contracted sales shrink by more than half for three consecutive months.
The deepening sales collapse carries implications well beyond Longfor. China's property sector, which once accounted for roughly a quarter of gross domestic product, has been in a downturn since mid-2021 following Beijing's "three red lines" deleveraging campaign. Despite dozens of policy measures since late 2022 — including mortgage rate cuts, down-payment reductions, and the removal of home purchase restrictions in most major cities — homebuyer demand has failed to recover. New home prices in 70 major cities fell for a 35th consecutive month in May, according to National Bureau of Statistics data, while unsold inventory has swelled to a record 750 million square meters.
What the sales data means for the sector
Longfor's results mirror a broader industry collapse. Among China's top 100 developers by sales, aggregate contracted sales in the first half of 2026 fell roughly 45% year over year, according to preliminary data from China Real Estate Information Corp. The decline has been broad-based, affecting both state-owned enterprises like China Vanke Co. and private developers alike. Vanke, which reported a 38% drop in 1H sales, has fared slightly better than its private-sector peers, reflecting the advantage of state backing in securing financing and completing projects.
The sales drought has also tightened the liquidity squeeze on developers. Longfor held RMB82.4 billion in cash and equivalents as of December 2025, according to its annual report, but the rapid depletion of operating cash flow from plunging sales is testing even the sector's strongest balance sheets. The company has not reported a default or missed bond payment, distinguishing it from peers like Evergrande Group and Shimao Group Holdings Ltd. that have undergone offshore debt restructuring.
For the broader Chinese economy, the property downturn remains the single largest drag on growth. Real estate investment fell 10.1% in the first five months of 2026 from a year earlier, National Bureau of Statistics data show, while property-related tax revenue declined 8.5%. The sector's weakness has also weighed on local government finances, which rely heavily on land sales, and on consumer spending, as falling home values erode household wealth.
Looking ahead, analysts expect no near-term recovery. "We see no catalyst for a meaningful rebound in home sales in the second half of 2026," Wang said. "The structural issues — oversupply, weak demographics, and damaged consumer confidence — will take years to resolve." Longfor's stock, which has lost about 60% of its value since the start of 2024, rose 3.3% on Monday in Hong Kong trading, a move analysts attributed to short covering rather than a change in fundamentals.
This article is for informational purposes only and does not constitute investment advice.
