China’s sales of homes fell by 10.9 percent during the first eight months of 2014 compared to the same period last year – an even more dramatic slowdown than the 10.5 percent drop recorded during the period through July.
A chart of the growth rates of housing sales by revenue (in blue) and area (in yellow). (Source: National Bureau of Statistics)
The housing slump is only a part of a general downturn in the country’s real estate sector, according to figures released today by China’s National Bureau of Statistics, which showed slowing investment in the property sector, as well as disappointing results for a number of macroeconomic indicators.
Selling Fewer Homes for Less Money
The 10.9 percent slowdown for overall sales of homes brought China’s residential property revenues to RMB 3.43 trillion ($559 billion) for the first eight months of the year, despite the widespread repeal of home purchase restrictions in many cities during July and August.
The figures for the real estate sector overall (including commercial properties) were slightly less discouraging, with sales through August down 8.9 percent year on year to RMB 4.17 trillion.
In terms of area, sales of real estate were down 8.3 percent year on year to 650 million square meters, with the rate of slowdown in sales by area also accelerating compared to the 7.6 percent drop seen through the first seven months of the year. Sales of residential real estate were down by 10.0 percent to 571 million square metres.
Land Acquisition and Construction Starts Up
A year-long slowdown in construction starts for the residential sector showed some signs of moderating in August with the Bureau reporting 1.14 billion square metres getting underway so far this year, a decrease of 10.5 percent compared to the same period of 2013, but a lesser shortfall than the 12.8 percent slowdown recorded in the seven months through July.
Growth rate in China’s land sales by area
The rate of land acquisition also continued to show recovery during August with total land sales for January through the end of the month reaching 207.87 million square metres, a decrease of 3.2 percent compared to the same period of last year, but a moderation from the 4.8 percent slowdown in the period through July or the 5.8 percent dropoff recorded from January through the end of June.
Growth in Real Estate Investment Slows to 13.2%
Despite whatever good news there might have been from land sales and construction starts, growth in investment in the once white-hot industry slowed to 13.2 percent for the first eight months of 2014, compared to the same period last year.
Growth rate in China’s real estate investment for 2013-2014 (National Bureau of Statistics)
The rate of new investment was down compared to the 13.7 percent year on year growth recorded during the period from January through July. Total new investment in the real estate industry in 2014 is said by the Bureau to have reached RMB 5.9 trillion by the end of last month.
The release of the disappointing real estate statistics came on the same day that the Bureau released monthly numbers on a broader range of measures, which showed a sharp deceleration in industrial output, weaker fixed-asset investment, and slower than expected retail sales.
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