China property sales sink in first two months
Mainland property sales slumped 16.3pc to 77.1 million square metres in the first two months of this year, compared to a 7.6pc drop for all of 2014
China's property sales tumbled 16.3 per cent in the first two months, widening quickly from a drop of 7.6 per cent for all of 2014, indicating more steps may be needed to stabilise a crucial driver of the broader economy.
Carol Wu, head of research for Hong Kong and mainland China at DBS, said China could sustain annual housing demand for 1.2 billion square metres as many families needed to upgrade their old existing, self-built homes with no facilities to better ones.
Developers sold a total of 77.09 million square metres of residential property in the first two months, compared with 1.05 billion square metres last year and 1.1 billion square metres in 2013, according to data from the National Bureau of Statistics.
Wu's estimates are more optimistic than other analysts at a time when developers are more concerned about declining profitability due to soaring land, funding and labour costs. Sales expansion has become less of a focus for many developers as they anticipate a slowdown in housing demand growth, or even a gradual downturn.
Country Garden, China's No6 developer in terms of sales, reported a 1.5-percentage-point fall in net profit margin to 12.1 per cent last year amid an industry correction that started in February 2014. Property revenues in the first two months fell 15.8 per cent to 597.2 billion yuan (HK$750 billion). The data indicates a slight pick up in property prices across the nation given that the decline in sales revenue is smaller than the fall in space sold, contradicting private surveys that pointed to a fall.
"Inventories will be reduced in first-tier cities in the second half, and then prices in these cities will recover," said Wu at DBS.