China’s big developers saw sales decline in May on property curbs
Developers encounter difficulty gaining pre-sale permits, exacerbating supply shortage
China’s top three mega developers, which represent a tenth of the country’s market, saw their contracted sales drop 14.4 per cent month on month in May as property tightening measures continue to weigh on the market and developers delay sales amid price controls.
The big three delivered combined sales of 114.1 billion yuan (US$16.79 billion) for the month compared with 133.3 billion in April, according to their public filings.
Country Garden, the country’s largest developer by sales, posted the largest slump among the three: contracted sales fell by a quarter from 53.5 billion yuan in April to 40 billion yuan in May.
China Vanke saw its May sales total 35.9 billion yuan, down 14.3 per cent over April, while China Evergrande Group’s sales rose from 37.85 billion yuan in April to 38.2 billion in May.
Signs of sequential weakness were seen in April. This is likely extending into May, given vigorous policy tightening…we expect sales to slow nationally for the rest of the year,” JP Morgan China’s property team wrote in a June 1 research note.
The combined contracted April sales of 26 Hong Kong-listed mainland developers fell an average of 19 per cent over March after a large number of city governments stepped up property tightening.
Down payments for second-time home buyers in first and many second-tier cities were raised to 60 to 80 per cent, while mortgage rates for first and second-time buyers were also raised.