China Developers Try to Revive Moribund Home Sales in Golden Week

“Assured money protection in government-supervised accounts,” stated one of Evergrande’s advertisements, an apparent effort to reassure buyers that the cash they put down for unfinished homes won’t be used for other purposes.

China Vanke Co., one of the country’s largest developers that is on much steadier financial footing, has advertised initial deposit payments of as little as 999 yuan, equivalent to $151, on apartments it is selling in the city of Foshan in Guangdong province. One ad said people who confirm their apartment purchases between April 30 and May 4 would also receive a set of 10 household appliances, including a vacuum cleaner, standing fan and food blender. Prices start at 700,000 yuan, equivalent to $105,630, for Vanke’s apartments in the city.

In the coastal Jiangsu province, an advertisement for a project from

Poly Developments & Holdings Group Co.

, a state-backed developer, said buyers can make a 5% down payment to purchase a home. It is also giving away Huawei-branded products and household appliances as sweeteners.

The first week of May has traditionally been one of two peak periods for apartment presales in China, and sales promotions are common during this time, said Iris Chen, a credit analyst at Nomura. This year, however, the domestic property market is in a deep slump, and many developers have an urgent need to revive sales after many months of declines.

New-home sales in China have plunged since last summer, when Evergrande ran into cash-flow problems and construction was halted at hundreds of the giant developer’s projects. A loss of confidence in the broader real-estate sector ensued, with global investors dumping Chinese developers’ bonds, and home buyers worrying that they wouldn’t get apartments that they paid for.

China’s developers have been discounting their apartment prices since late 2021 to get cash to pay off their debts. Developers have offered discounts and perks such as free parking spaces and management-service-fee exemptions, but sales have continued to slide. The country’s top 100 real-estate developers experienced a 53% drop in sales in March from the same month a year ago, according to data from China Real Estate Information Corp.

In addition to Evergrande, at least 10 Chinese developers have defaulted on their dollar debt, and even some stronger players, such as Sunac China Holdings Ltd., are struggling to stay afloat.

Chinese authorities have been trying to help support the property market, which is a significant contributor to the country’s gross domestic product. In the past six months, China’s central bank has twice lowered the amount of funds that banks must hold in reserve, in moves meant to help boost mortgage lending. Officials have also decided not to extend a property-tax trial to more cities this year.

Some local governments have recently allowed developers more flexibility in using their apartment presale proceeds. Since early this year, local governments across the country have also issued incentives for home purchases, by lowering down-payment ratios and mortgage rates, and providing subsidies to home buyers. In some cases, caps have been lifted for the maximum number of apartments that individuals can buy.

Banks across the country, meanwhile, have expedited their mortgage approvals for home buyers, according to industry research reports and Chinese state media.

On Friday, a Communist Party meeting chaired by President

Xi Jinping

mentioned “optimizing regulation of presale escrow funds” for the first time, according to a statement published by the state-owned Xinhua News Agency. The comment was taken by bond investors and analysts as a signal that Chinese authorities intend to further loosen restrictions on developers’ use of such funds, helping to lower their default risks

Consumer confidence in China, however, is currently low—in part because of lockdowns and related restrictions in dozens of cities following recent Covid-19 outbreaks—and some analysts say the aggressive sales tactics by developers might not work this time.

“When you offer big discounts, home buyers would be afraid,” said Bai Wenxi, chief economist at the China arm of property-investment company IP Global, adding it could signal that developers are desperate to sell their apartments.

Home buyers are still cautious with spending on houses given the slowing economy and resurgent pandemic, said Raymond Cheng, CGS-CIMB Securities’ head of China research. Cities such as Shanghai that have imposed lockdowns to contain rising new cases would experience moribund sales, he said.

For Evergrande, which had around $300 billion in liabilities as of June last year and needs to sell assets, the holiday sale is a way to raise cash more quickly, said Nomura’s Ms. Chen. The Chinese government has recently granted new presale permits allowing some troubled developers to sell apartments to home buyers.

The Guangzhou-based developer last year sought government assistance after being unable to repay its debts, and said work resumed at many of its projects shortly after. The 10,000 homes it is selling include 2,000 apartments that have been completed, while the rest are unfinished.

At one Evergrande project in Chengdu—whose completion is scheduled for August 2023—apartments were advertised at 12,000 yuan to about 13,000 yuan per square meter (equivalent to about $180 per sq ft), prices that were 40% lower than nearby properties. More than 600 people came to see the apartments in recent days, and only 11 of the 124 units on sale haven’t been taken, said a real-estate agent working on the project.

Write to Cao Li at li.cao@wsj.com