China’s home sales fell 28 percent in July, the biggest monthly decline this year, as tight mortgage lending outweighed efforts by local governments to ease property curbs as prices and demand weakened.
The value of homes sold fell to 424.2 billion yuan ($69 billion) last month from 591.2 billion yuan in June, according to the difference between the National Statistics Bureau’s data for the first seven months and the first half of the year. The value of sales in the first seven months fell 10.5 percent to 2.99 trillion yuan from a year earlier, the data showed.
“Today’s data will hurt sentiment as the property market has no fundamental recovery yet as investors imagined,” Edison Bian, a Hong Kong-based property analyst at UOB Kay Hian Ltd., said in a phone interview today. “Developers are still very cautious even as local governments are easing policies. Mortgages should ease further, so that reluctant developers will supply more homes.”
Chinese cities began relaxing local property restrictions in June amid sluggish sales and as an oversupply in second- and third-tier cities drove prices lower. Thirty-six Chinese cities eased their policies as of the end of last week, Centaline Property Agency Ltd., China’s biggest real estate broker, said in a report.
While more cities are set to follow, buyers remain hesitant as the central bank maintains mortgage restrictions, according to Centaline. In Beijing and Shanghai, first-home mortgage rates were the same as the benchmark rate in July, while in the southern business hub of Guangzhou they were 5 percent to 10 percent higher than the benchmark rate, Centaline said.
The cities of Nanning, Hohhot and Jinan have announced a relaxation of local home-purchase restrictions, while other cities including Chengdu and Xiamen have loosened the implementation of such curbs without announcement, according to property data provider China Real Estate Information Corp. The moves unwind policies enacted under former Premier Wen Jiabao to prevent a housing bubble.
Investment in homes, office buildings, malls and other real estate rose 13.7 percent to 5.04 trillion yuan in the first seven months, compared with a 21 percent gain a year earlier, according to today’s data. New property construction dropped 12.8 percent to 982.3 million square meters (10.7 billion square feet) over the same period.
The Shanghai Stock Exchange Property Index rose 0.1 percent, the only gain among the five industry groups on the benchmark Shanghai Composite Index (SHCOMP), which dropped 0.6 percent as of 1:52 p.m.
Home sales by area fell 9.4 percent in the January-to-July period from last year to 495.9 million square meters, the data showed. The value of property sales including office buildings and retail space declined by 8.2 percent to 3.63 trillion yuan from a year ago.
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