Sales at China’s top 100 developers slow down in the first half as property curbs bite
- Contracted sales at these 100 companies rose 4 per cent year on year to 3.9 trillion yuan (US$570 billion) in the first six months
- Sales in the first half of 2018 rose 37.6 per cent from the same period in the previous year
Sales at China’s top 100 developers slowed significantly in the first half, and the outlook for the second half remains weak amid a tightening of home buying restrictions and a funding squeeze on builders in place since May, a report from property consultancy CRIC showed on Monday.
Excluding revenue from jointly developed projects, contracted sales at these 100 companies rose 4 per cent year on year to 3.9 trillion yuan (US$570 billion) in the first six months, a sharp drop from the 37.6 per cent surge in the first-half of 2018.
The combined contracted sales of these 100 companies represent more than half of overall sales on the mainland and is viewed as an important barometer of China’s housing market.
“Looking at the second-half, the property buying curbs remain a big worry for developers,” said Yang Kewei, head of research at CRIC. “The policy for the overall market should be stable: no easing and no tightening.”
Yang added that some of cities that have seen rapid price gains could see additional restrictions.
Hangzhou, in the eastern province of Zhejiang with the largest land sales revenue among all mainland cities, over the weekend became the latest city to tighten its land tender restrictions. One of the new rules stipulate that future home sales prices have to be set when the land is sold. The move made it the only city to lock future selling prices other than Beijing.
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Property prices in China, especially in second-tier cities like Hangzhou, rose in March and April, forcing local governments to step in and set stringent land sale conditions to clamp down on the surging premium. The banking regulator in late May also ordered banks not to channel funds into developers via the shadow banking sector. About 20 developers were deemed “aggressive in land bidding” and were temporarily barred from tapping the onshore bond market.
Separately, average home price in 100 mainland cities monitored by the China Index Academy rose 1.45 per cent in the first six months, slowing from 2.64 per cent a year ago.
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“The sales momentum has cooled since late May, with the sell-through ratio declining,” said Zhang Huadong, chief analyst with Shanghai-based EH Consultancy. “The self-occupation demand remains solid, but the investment demand has dipped as the outlook has worsened.”
He expected the mainland’s top 10 developers to be able to better withstand the slowdown, with stable sales growth in the second half, and tapering growth for developers who registered faster-than-average growth in the first half.
The mainland’s top three developers recorded slightly lower net sales in the first-half, according to CRIC. Country Garden, the largest developer in terms of net sales, saw a marginal 0.056 per cent dip in sales to 279.8 billion yuan. Net sales at Evergrande and China Vanke declined 7.1 per cent and 5.3 per cent to 268.7 billion yuan and 200.9 billion yuan, respectively.
For the whole year, the Swiss bank UBS expects home sales volume to remain flat but sales value to grow 2 per cent. The investment bank CICC, however, expects sales volume to decline 1 per cent but sales value to rise 3 per cent.
