China April Home Sales Fall 16% as Property Curbs Remain

China’s home sales transaction value fell 16 percent in April from the previous month as the government reiterated it will keep curbs on the property market.

The value of homes sold declined to 315.4 billion yuan ($50 billion) from 373.3 billion yuan in March and 324.9 billion yuan a year earlier, based on the difference between the National Statistics Bureau’s data for the first four months of the year and the first quarter. Housing sales value from January to April fell 13.5 percent to 1.02 trillion yuan from a year earlier, according to the data.

“It’s very hard to forecast when sales will fall to the bottom,” said Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG. “It may pick up in the coming months, because developers are cutting prices to boost sales volume.”

Premier Wen Jiabao has said the government will “resolutely” maintain its curbs on the property market. The government has toughened requirements for down payments and mortgages, and imposed restrictions on the number of homes each family is allowed to buy.

Mortgage Lending

Industrial & Commercial Bank of China Ltd. suspended a 15 percent discount on mortgage lending for first-time home buyers nationwide, the official Xinhua News Agency reported on May 5. The suspension was made to address tight liquidity and deposit instability and other Chinese banks may follow suit, said Sophie Jiang, a Hong Kong-based banking analyst at Religare Capital Markets, in a May 7 report.

Investments in homes, office buildings, malls and other real estate gained 18.7 percent to 1.6 trillion yuan from January through April, slower than the 34 percent gain a year earlier, according to the statistics bureau. New property construction declined by 4.2 percent to 544.7 million square meters (5.9 billion square feet).

Faster-than-expected slowdown of property investments and construction may lead to slower economic growth in China, Johnson Hu, a Hong Kong-based property analyst at CIMB-GK Securities Research, said in an e-mailed note to clients today. The government is under pressure to ease monetary policies and fine-tune property policies, Hu said.

Construction Slowing

The eastern city of Yangzhou in Jiangsu province will offer new buyers subsidies of as much as 0.6 percent of the total value of a home, Xinhua Daily reported on May 8, citing the local finance bureau.

Developers are starting more projects, though slowing construction, an indicator of a cash shortage, according to a biannual construction survey of Credit Suisse Group AG on May 8. About 93 percent of the construction companies experienced payment delays from property developers, 13 percentage points higher than half a year ago, it said.

A gauge tracking property shares on the Shanghai Composite Index fell 0.7 percent at the local close, while the benchmark Shanghai Composite Index lost 0.6 percent.

China Vanke, Poly

Home sales volume dropped 14.9 percent in the first four months to 190 million square meters, the government data showed today.

China Vanke Co., the nation’s biggest developer by market value, said April sales fell 35 percent from March. Sales at Poly Real Estate Co., the second biggest, declined by 6.6 percent to 9.1 billion yuan in March, according to the company.

More than 60 percent of home buyers and developers said China’s home prices will not fall to a “reasonable level” this year, according to SouFun Holdings Ltd., the country’s biggest real estate website, which surveyed almost 1,000 buyers and dozens of developers. The report didn’t give exact numbers of how many people it surveyed.

About 20 protests by homeowners asking developers to cut prices for new buyers took place in the eastern Chinese city of Hangzhou, according to a newspaper published by the state-owned Xinhua News Agency on May 8.

(Updates with analyst’s comments in 7th paragraph and closing prices in 9th.)
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