China April Home Sales Decline 18% as Credit Remains Tight

China’s home sales fell 18 percent in April, amid tighter credit, adding to signs of a slowdown in the world’s second-largest economy.

The value of homes sold declined to 418 billion yuan ($67 billion) from 509 billion yuan in March, according to the difference between National Statistics Bureau data for the first four months of the year and the first quarter. The value of sales from January to April fell 9.9 percent to 1.53 trillion yuan from a year earlier, data showed today.

China’s broadest measure of new credit fell last month as authorities extended their campaign to tame a debt boom. New-home sales in 54 cities during the May 1-3 Labor Day holiday dropped 47 percent from a year earlier to 236,000 square meters, a four-year low, according to realtor Centaline Group.

Slowing property data “are testing the tolerance of the government on the economic slowdown,” said Dai Fang, a Shanghai-based property analyst at Zheshang Securities Co. “Local government easing measures are meaningless for a recovery in the market. The key issue is when the credit will be loosened.”

At least six smaller Chinese cities have started relaxing local curbs on speculative and investment-driven home buying since the end of April. The northern city of Zhengzhou in Henan province issued draft rules to promote home purchases by low-to-middle-income households, according to a statement posted on the government’s website on May 7.

Bubble Risk

China’s property bubble is a “key risk” to watch in 2014, while the lagged impact of monetary tightening and regulatory scrutiny are compounding the risks of a property bubble bursting, Barclays Plc analysts led by Chang Jian wrote in a May 9 report.

New property construction fell 22 percent to 432 million square meters (4.6 billion square feet) in the first four months of 2014 from a year earlier.

Investment in homes, office buildings, malls and other types of real estate climbed 16 percent to 2.23 trillion yuan in the first four months, according to the statistics bureau. Overall real estate sales, including commercial buildings, dropped 7.8 percent to 1.83 trillion yuan in the period from a year earlier.

Home sales by area fell 8.6 percent in the first four months to 245 million square meters from the same period a year earlier, the government data showed.

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editors responsible for this story: Andreea Papuc at apapuc1@bloomberg.net Iain McDonald

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