Developers fail to capitalise on holiday spirit
The annual Labour Day holiday break is traditionally one of the busiest periods for the property market on the mainland as developers try to capitalise on the holiday spirit to boost sales.
But in many cities, this year was different.
Holiday sales were not encouraging in many cities, said analysts, with several reporting year-on-year declines. And for developers, if not buyers, the outlook was gloomy, they added, with continuous price cuts likely in the months ahead.
'Many sales personnel indicated that sales over the Labour Day holidays [April 29 to May 1] were better than during the previous week,' said Alan Jin, a Mizuho Securities analyst.
'However, when compared with the holiday period last year, quite a number said sales were down.'
Jin was commenting after visiting dozens of mainland projects last week to try to get a sense of the strength of the housing market after the Labour Day Holidays.
'An agent with Centaline told me that in China Vanke's Golden City project [in Wuhan], over 800 units were sold over last year's Labour holidays, while this time they sold fewer than 300 units,' Jin said.
Andy Lee Yiu-chi, head of the Shenzhen branch of Centaline Property Agency, said sales of new homes newly put on the market were higher than in previous weeks, but volumes were 10 to 20 per cent below sales during last year's Labour holiday period.
Official figures show sales of new homes in Shenzhen fell 33.69 per cent week-on-week last week. But Lee said the final transaction figures would only be fully reflected in next week's sales data.
In Beijing, 1,467 new homes were sold in the first week of May, a decline of 18 per cent year on year and down 20 per cent on the previous week. A similar decline was seen in Shanghai.
In Hangzhou, media reports say, home seekers lined up at sales offices of new projects to buy flats. But no sales figures were published.
Agents said sales were supported mainly by first-home buyers, with mass-market projects faring better than high-end ones, but overall sales were slow because many home seekers expect prices to drop further as a result of cooling measures.
'The general trend held true, namely that projects with lower asking prices and smaller units remain more popular than higher-end and larger units,' Jin said.
Lee expects the market to cool down after May, as long as the measures to curb demand stay in place.
'We are of the impression that the Labour Day sales, after stripping out the seasonality effect, are not encouraging. Although full-month sales may still be acceptable in May due to more new launches, the market may be unable to keep performing well after that,' Lee said. 'Price declines are certain, while volumes may not hold up. Price cuts seem the only way to [attract] homebuyers.'
The number of consecutive months in which property prices on the mainland have fallen
Source: China Index Academy