Country Garden, China Evergrande and China Vanke among developers reporting decline in January home sales
- More than 30 per cent of the mainland’s top 100 developers have posted a year-on-year drop in housing contract sales, according to CRIC
- Country Garden reports year-on-year decline of 52.2 per cent
Mainland Chinese property developers have reported a decline in home sales for January, in a sign the Year of the Pig could be in for a rocky start.
According to property consultancy CRIC, more than 30 per cent of the mainland’s top 100 developers posted a year-on-year drop in housing contract sales, or presales of unfinished homes, for the first month of 2019. Among these, 13 reported a more than 30 per cent decline in sales.
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Mainland China’s top three developers, Country Garden, China Evergrande Group and China Vanke, all fell victim to weak market sentiment. Country Garden reported a year-on-year decline of 52.2 per cent in housing contract sales, which stood at 33 billion yuan (US$4.9 billion) in January. Evergrande reported a decline of 32.9 per cent with sales of 43.2 billion yuan, and Vanke reported that sales had decreased by 28.1 per cent to 48.9 billion yuan.
“Homebuyers are expecting lower housing prices amid the current weak market,” said Stephenie Zhou, head of project sales at JLL Shanghai. “A fall in prices of pre-owned flats is expected to continue this year.”
The real estate sector has been a key driver of China’s economy over the past two decades. A total of 1.7 billion square metres of residential property were sold across the country in 2018, up 1.3 per cent from a year earlier. The sector reported a growth in sales of 7.7 per cent in 2017.
China, the world’s second-largest economy, posted 6.6 per cent growth in gross domestic product last year, its slowest increase since 1990.
Beijing as well as local governments regularly roll out curbs to prevent overheating in the property sector, and ease restrictions when they need the sector to support the larger economy.
Homebuyers are expecting lower housing prices amid the current weak market
In 2016, governments in major cities such as Shanghai stepped in to cool a red-hot property sector with measures such as raised thresholds for non-locals buying homes and increased down payment rates.
Then in December last year, cities in southern China such as Zhuhai and Guangzhou, along with Heze in the eastern Shandong province, loosened curbs to bolster home sales.
In Shanghai, the prices of pre-owned homes are estimated to have dropped by about 10 per cent in 2018. But Mayor Ying Yong said the city would maintain its tight grip on the housing market to ensure stable home price movement.
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“The real estate market will turn around when the mainland economy returns to a healthy growth track, spurred by industries such as telecommunications, education and health care,” said Sam Xie, head of research at CBRE China. “Regarding the question of whether it is time to buy a flat, it all comes down to the point of whether homebuyers are still bullish about the country’s economic outlook.”
