Home Sales Figures Drop 5% as Developers Get Gloomy

The value of home sales in China totaled only RMB 598.5 billion during the first two months of 2014, representing a five percent drop from the same period a year ago, as clampdown on credit starts to reduce the number of real estate transactions.

The fall off in sales value marks a shift in the market in China, where sales had almost doubled in the first few months of 2013, after a more subdued performance in January and February of 2012. The figures were revealed in the latest update from China’s National Bureau of Statistics.

With prices in the country’s residential market appearing to stall out following a credit clampdown and a round of new market restrictions from the government late last year, a number of top real estate executives are starting to sound gloomy.

Reports in February had already shown transaction volumes in China’s major cities to be falling by more than 29 percent in some cases.

Leading Developers Send Conservative Messages

Wang Shi, founder of the nation’s largest residential developer by sales value, China Vanke, posted a blunt warning on his Weibo microblog saying, “The situation in China’s property market is very bad.”

Ren Zhiqiang, the outspoken chairman of Huayuan Property also warned other developers not to be too positive about market prospects this year. Ren’s own prediction is for only single-digit gains in home price in 2014.

China Overseas Land chairman, Hao Jianmin, also sounded conservative regarding this year’s market prospects, as the largest Hong Kong-listed mainland developer announced sales targets for 2014 of RMB 110.8 billion, compared to last year’s RMB 109.7 billion.

The firm is aiming for contract sales of HK$140 billion in 2014, compared with last year’s sales of HK$138.5 billion.

“It’s a goal we have to reach no matter what the state of the market. So this may come across as a conservative target,” Hao Jianmin told the South China Morning Post. The developer cited tight liquidity in the financial market as the primary reason for the modest potential for sales this year.