Mingtiandi

Asia real estate and outbound investment news

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
Sign Up / Login Logout

Lost your password?
Register
Forgotten Password
Cancel

Register For This Site

A password will be e-mailed to you.

  • Capital Markets
  • Events
    • Mingtiandi 2023 Event Calendar
    • Mingtiandi APAC Residential Forum 2023
    • Mingtiandi Asia Logistics Forum 2023
    • Mingtiandi Hong Kong Focus Forum 2023
    • Mingtiandi APAC Data Centre Forum 2023
    • Mingtiandi Asia Office Strategies Forum 2023
    • Mingtiandi Singapore Focus Forum 2023
    • More Events
  • MTD TV
  • People
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail
  • Research & Policy
  • Advertise

China Home Sales Rebound in May, But Investment Slide Continues

2015/06/14 by Michael Cole Leave a Comment

Chart by Visualizer

China’s new home sales rose by 30 percent in May, as government moves to cut interest rates and remove home purchase restrictions appear to have succeeded in luring buyers back into the market.

The nation’s property developers seem less convinced of the prospects of China’s housing market, however, as the growth rate of investment in new real estate projects continued a year-long slide, according to the latest batch of figures from the National Bureau of Statistics.

China’s government has prioritised the rekindling of the country’s real estate industry in 2015 as it struggles to keep top-line GDP growth figures in line with its projection of 7.0 percent for the year.

The continued reluctance of property developers to commit more cash to new projects has many observers predicting further cuts in interest rates and other measures to revive an industry that is said to account for as much as 15 percent of China’s economy.

Real Estate Sales Recovering Sharply in May

Real Estate Sales in Jan-Jun 2015Value (RMB Bil)% Growth Rate Y-o-YArea (Mil Sqm)% Growth Rate Y-o-Y
Total buildings sold3425.90.100502.640.039
Housing space sold2894.10.129443.890.045
Office space sold130.7-0.01810.64-0.024
Retail space sold333.3-0.01234.170.035

Sales of real estate in China were up sharply in May, bringing the growth rate in home sales, in terms of value, to 3.1 percent for the year to date, compared to the same period last year. The January to May figure was a dramatic change from the results for the year through April, which saw property sales lagging the mark for the first four months of 2014 by 3.1 percent.

In terms of sales of residential property, developers sold RMB 582 billion ($94 billion) worth of new units last month, an increase of 30 percent over May 2014, and the second straight month of growth in home sales.

The increase in new home sales follows soon after China’s central bank lowered down-payments for existing home owners who wanted to buy additional units. That move at the end of March, coupled with three cuts in benchmark interest rates since November, has moved China’s home sales back into positive territory in the last two months.

Developers Less Positive Than Consumers

Unfortunately for China’s economic authorities, the nation’s real estate business owners seem less encouraged by recent policy changes than the pool of cashed-up consumers that appear to be driving the sales rebound.

Chart by Visualizer

Growth in investment in development of new real estate projects slid to 5.1 percent over the first five months of the year, compared to the same period in 2014. The marginal rate of decline in growth is slowing compared to previous months, but is still down from the six percent growth recorded in the January to April period.

While China’s top leadership has been promoting the transformation of the economy towards a service and consumption-driven model (rather than relying too heavily on investment), the authorities also remain wary of any disruption that might result from making too abrupt of a shift.

Land Sales Still Slow, Local Governments Still Confident

For now those leaders seem still not to have convinced the nation’s property developers to buy more land sites. From January through the end of May, real estate investors bought 31 percent less land by area compared to the first five months of 2014. By the value of land purchased, transactions in the first five months of 2015 totalled RMB 219.2 billion, down 25.8 percent compared to the same period last year.

Chart by Visualizer

The slower sales of land, however, are largely driven by the calculations of local governments, who earlier this year withheld land from the market as demand dried up. Land sales in China’s first tier cities have recorded sharply higher prices in April and May with authorities in those areas dripping plots back into the market now that they are assured of getting the price that they want.

China’s local governments rely heavily on land sales for their revenues and many are reluctant to part with their precious plots at bargain rates, even when under cash-flow stress. Last month the central bank reopened a funding channel to allow provincial, city and district-level governments to borrow more money, thus enabling these authorities to continue to control land pricing.

During April this year, China Vanke, the country’s second-largest developer by sales, blamed a 57 percent drop in profit over the first quarter on aggressive land pricing by local governments.

Share this now

  • LinkedIn
  • Share
  • Tweet
  • Email

Filed Under: Research & Policy Tagged With: crebrief, home sales, housing sales, National Bureau of Statistics, real estate investment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Mingtiandi Delivered

MTD TV

Tim Foster
ESR, C&W Point to Robots, Solar Power in Quest for Efficient Shipping: MTD TV
mtd tv aussie panel thumbnail
SC Capital, JLL, RCA, Perri Predict Office Upswing as Australia Opens Up: MTD TV

More MTD TV Videos>>

People in the News

Johnny Shao CPE
Asia Real Estate People in the News 2023-03-27
Jonathan Yap CapitaLand
Jonathan Yap Named CapitaLand Development CEO as Leow Retires Early
Grace Woo Chia-ching, executive director of CK Asset (Getty Images)
Asia Real Estate People in the News 2023-03-20
Eugene Kohn KPF
Asia Real Estate People in the News 2023-03-13

More Industry Professionals>>

People in the News

Asia Real Estate People in the News 2023-03-27

Johnny Shao CPE

Top level moves at European and Asian fund managers lead this week’s list of personnel changes from around Asia Pacific … Read More>>

Jonathan Yap Named CapitaLand Development CEO as Leow Retires Early

Jonathan Yap CapitaLand

Singapore property giant CapitaLand on Thursday announced the upcoming retirement of CapitaLand Development CEO Jason … Read More>>

Asia Real Estate People in the News 2023-03-20

Grace Woo Chia-ching, executive director of CK Asset (Getty Images)

Senior changes at developers in Hong Kong and mainland China lead this week’s review of personnel changes in Asia, with … Read More>>

Asia Real Estate People in the News 2023-03-13

Eugene Kohn KPF

The passing of a global architecture giant leads this week’s round of personnel updates on Mingtiandi, as KPF mourns the … Read More>>

More Industry Professionals>>

Latest Stories

Kathy Lee Colliers Hong Kong
Reopening Buoys Market as Hong Kong Home Prices Rise for Second Straight Month
Cross Street Exchange
Singapore Central Business District Office Rent Growth Slowed to 1% in Q1
Sunac Guangzhou
Sunac China Sweetens Offshore Debt Deal and More Asia Real Estate Headlines

Sponsored Features

TE Capital's Solitaire on Cecil
Pair of Floors Sold as TE Capital, LaSalle Launch Cecil Street Office Tower in Singapore
What Do Real Estate Investors Really Want?
Douglas Wu of Fairland
Fairland Creates Spark City Lifestyle Hub to Energise Hong Kong’s Cheung Sha Wan

More Sponsored Features>>

Connect with Mingtiandi

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Real Estate News

  • Capital Markets
  • 2022 Event Calendar
  • MTD TV Archives
  • People
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail

More Mingtiandi

  • About Mingtiandi
  • Contact Mingtiandi
  • Mingtiandi Membership
  • Newsletter Subscription
  • Advertise
  • Terms of Use
  • Privacy
  • Join the Mingtiandi Team


© 2007-2023 China Advertising Media Ltd (Samoa). All rights reserved.

  • This field is for validation purposes and should be left unchanged.