China’s second-largest developer by sales said the nation’s home market is currently “worse than expected,” joining a chorus of investors and analysts who have become bearish on the country’s real estate sector.

China Vanke Co chairman Yu Liang backtracked his neutral assessment from March, changing to the view that the property industry is “indeed seeing pressure in the short-term,” according to a company transcript from Vanke’s shareholder meeting last Friday (June 30).

“The real situation is a bit worse than what was expected” earlier, Yu said. In March, he brushed off concerns that China’s housing recovery was short-lived.

The change in Yu’s rhetoric underscores developers’ concerns for the industry. While a slowdown in price growth has in some ways been welcomed by policymakers seeking to rein in speculative buying, the risks of a deeper-than-desired slump is rising at a time when the broader economy is losing momentum.

The value of new home sales by the 100 biggest real estate developers, a high-frequency metric, snapped a four-month rebound to resume year-on-year declines in June, China Real Estate Information Corp. data showed on Friday. That’s a worrying sign even though they still registered a mild gain from May.

Home-viewing rates for both new and existing ones fell further in June, suggesting that sales for last month “won’t be optimistic,” Vanke’s Yu said, without elaborating the source of the data.

China may relax some home-buying restrictions and down-payment requirements in non-core areas. This could happen regionally instead of nationally, JPMorgan Chase & Co property analysts led by Karl Chan wrote on July 2.

Yu reiterated long-term demand for housing still exists. China’s urban population could increase by nearly 70 million in the next decade, he said, adding that many people need to upgrade from rundown buildings. 

Nearly 17% of people expect housing prices to fall in China next quarter, compared with 14.4% when interviewed last quarter, according to a central bank survey with depositors published on Friday.

  - Bloomberg