More property sector easing expected as Chinese builders struggle to sell homes, analysts say
- The value of combined contracted sales at top 100 developers fell 47.2 per cent in February from last year, widening from a slump of 41 per cent in January: CRIC
- Policymakers will have more supportive measures to reverse the very weak sales trend, analyst says
The value of the combined contracted sales at the country’s top 100 developers fell 47.2 per cent in February from last year to 401.6 billion yuan (US$63.6 billion), widening from a slump of 41 per cent in January, according to China Real Estate Information Corporation (CRIC), which compiles industry data. Contracted sales or presales, which account for about 90 per cent of new home sales, are the primary cash stream for China’s home builders.
Analysts said more easing was on the cards.
“Given the importance of China’s property sector to its gross domestic product and jobs market, we expect policymakers will have more supportive measures to reverse the very weak sales trend,” said Raymond Cheng, managing director of CGS-CIMB Securities.
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The central government has rolled out some easing measures, including lower mortgage rates and faster home loan procedures, to help improve sentiment.
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Some signs of a recovery were visible towards the end of February, after some relief measures were extended to the sector. For instance, weekly sales in 25 major cities tracked by CRIC declined 31 per cent in the week beginning on February 21, narrowing from a 39 per cent drop in the last week of January.
“We believe this is partially driven by improving homebuyer sentiment amid incremental policy easing,” said Stephen Cheung, an analyst with US investment bank Jefferies.
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A gradual recovery in the volume of contracted sales could start in March, said CGS-CIMB Securities’ Cheng. This month could yield a sales increase compared to February.