April 16 (Bloomberg) -- China’s home sales fell and new property construction declined 25 percent in the first quarter, as credit remained tight, adding to signs of a slowdown in the world’s second-largest economy.
The value of homes sold fell 7.7 percent to 1.1 trillion yuan ($177 billion) in the three months to March from the same period a year ago, the National Bureau of Statistics said today. The last time home value sales dropped in the first quarter was in 2012. New property construction declined to 291 million square meters (3.1 billion square feet) in the quarter.
China’s broadest measure of new credit in March fell 19 percent from a year earlier and money supply grew at the slowest pace on record, according to People’s Bank of China. China’s expansion slowed to the weakest pace in six quarters in the January-to-March period, a separate government report showed today, adding to risks of missing an annual growth target of about 7.5 percent.
“The big drop in new property construction was a surprise and it shows that developers, mostly non-listed, are concerned about the property market outlook and holding off home-building,” said Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG. “Tight credit, with less money flowing in the market, is the main reason for the weakening sales.”
Unlike his predecessor that imposed nationwide property curbs, Premier Li Keqiang last month said the government will regulate the housing market differently in different cities to take into account local conditions.
Agricultural Bank of China Ltd., the nation’s third-largest lender, this month alerted its branches about risks from property lending, according to two people familiar with the matter.
Only two banks offered discounts on mortgage lending rates for first home buyers, according to a China Real Estate Information Corp.’s report on April 9, citing its telephone survey conducted in February, which covered 69 banks in 22 Chinese cities.
Investment in homes, office buildings, malls and other types of real estate climbed 17 percent to 1.53 trillion yuan in the first quarter, according to the statistics bureau. Overall real estate sales, including commercial buildings, dropped 5.2 percent to 1.33 trillion yuan in the period from a year earlier.
China’s property market will worsen in the coming months with developers posting yearly and monthly declines of both sales and prices, Morgan Stanley analysts led by Brian Leung wrote in a note to investors yesterday.
Home sales area fell 5.7 percent in the first quarter to 178.3 million square meters from the same period a year earlier, the government data showed today.
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