Loan curbs push down China home sales

Deals fall 21pc by volume for last month, and lack of new projects is compounding the slump

PUBLISHED : Saturday, 10 August, 2013, 12:00am
UPDATED : Saturday, 10 August, 2013, 4:31am

Private housing sales on the mainland dropped 20.74 per cent by volume last month due to tighter mortgage rules amid poor market sentiment.

Data from the National Bureau of Statistics showed 86.58 million square metres of private homes were sold last month, less than the 109.24 million square metres sold in June.

The value of the homes sold dropped 17.28 per cent from 624.4 billion yuan (HK$785.6 billion) in June to 516.5 billion yuan in July.

Dickson Wong Hung, chief executive at Centaline (China) for northern and southwestern China, said the fall in property sales was due to banks tightening mortgage lending in June and July. "Market sentiment also has been affected by poor economic figures over the last two months," he said,

"Developers are not active in releasing new residential projects during the period as June, July and August are the traditional low season for the property market. This has led to the decrease in property sales."

He said home sales in the first week of this month were slightly up on those of a month ago and if that continued, sales in August would be better than in July.

"Developers will start to launch more new projects at the end of August and September. Home sales next month will increase," he said.

Sales have improved significantly compared with a year ago. They reached 547.48 million square metres in the first seven months of this year, 27.1 per cent more than a year earlier. By value, sales grew 39.9 per cent to 3.338 trillion yuan.

Due to improving home sales this year, investment in the real estate market increased 20.5 per cent to 4.43 trillion yuan in the first seven months. More than 68 per cent of this investment was for residential development.

Moody's Investors Service said contract sales of mainland developers grew at a robust rate of 46 per cent year on year in the first half of this year, supported by solid underlying demand for residential properties.

But the growth rate was lower than the 69 per cent recorded in the first quarter of this year. It reflected the pent-up demand that was gradually absorbed, and the effect of the government's February announcement it was reinforcing restrictions in the sector.