China’s housing market continued to show signs of recovery in April with sales of new homes climbing on a annualised basis for the first time in over a year.
| Real Estate Sales in Jan-Apr 2015 | Value (RMB Bil) | % Growth Rate Y-o-Y | Area (Mil Sqm) | % Growth Rate Y-o-Y |
|---|---|---|---|---|
| Total buildings sold | 1,773.9 | -3.1% | 263.9 | -4.8% |
| Housing space sold | 1,491.6 | -2.2% | 232.8 | -5.0% |
| Office space sold | 68.6 | -13.3% | 5.6 | -13.6% |
| Retail space sold | 176.8 | 0.1% | 17.8 | 5.2% |
Sales of new housing nationwide grew to RMB 485.4 billion ($78.2 billion) last month, up 16 percent from the same period in 2014, according to figures released by China’s National Bureau of Statistics and analysed by Mingtiandi.
Despite the rebound in sales, however, the latest batch of data shows that new investment by the country’s property developers continues to drop rapidly, and sales of new land remained flat.
Government Moving to Revive Sales
The statistics bureau, which only releases data on a year-to-date basis and does not break down its figures by month, reported that the country’s housing sales in the first four months of 2015 fell by 2.2 percent compared to the same period last year. However, this total was still an improvement over the 9.2 percent rate of decline suffered during the first quarter.
In late March the central bank relaxed downpayment requirements for buyers of second or third homes from 60 to 40 percent in most markets, bringing a large pool of wealthy buyers and speculators back into the market. The government also reduced some taxes and fees on housing transactions to revive the market.
The People’s Bank of China has also been trying to stimulate more borrowing, and earlier this week announced its third reduction in benchmark interest rates since November of last year. The government has been taking gradually stronger moves to stimulate the economy this year as GDP growth threatens to slip below policy-makers target of seven percent, and real estate – which accounts for 15 percent of China’s GDP – has been a prime target of these measures.
Developers Waiting for Sales, Not Government Measures
Despite the government stimulus, however, the bureau’s new numbers show that the nations’ property developers have yet to return to their free-spending ways.
In the wake of the year-long downturn, investment in property projects slowed to six percent in the period from January to the end of April, compared to the first four months of 2014. New property starts were also down by 17.3 percent over the same time frame, quickening from an 18.4 percent rate of decline in the first three months.
While the year on year decline in sales of new remained relatively constant from March to April, in terms of the area of new sites sold by local governments, for the year to date, such sales are down 33 percent compared to the same period in 2014.
The rebound in sales should encourage many developers to again begin thinking about investing in new projects, however, those decisions will depend largely on the amount of unsold inventory available in specific markets. A recent privately conducted survey showed housing prices already rising in China’s first tier cities, but the inventory of unsold homes still grew to over 431 million square metres by the end of April, up by nearly 24 percent over the same period last year.
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