China August Home Sales Fall as Curbs and Prices Damp Demand

China’s home sales transaction value fell for a second month in August from the previous month, as rising prices strained buyers’ finances.

The value of homes sold dropped to 514.6 billion yuan ($84 billion) last month from 516.5 billion yuan in July, based on the difference between the National Bureau of Statistics data for the first eight and seven months of the year today. Housing sales from January to August were up 35.7 percent to 3.85 trillion yuan from the same period a year earlier, according to the data.

Home prices posted their biggest gains in August since December, according to SouFun Holdings Ltd., China’s biggest real estate website owner, hurting demand in the traditional low season for property sales amid the government’s curbs. Former Premier Wen Jiabao in March stepped up a three-year campaign to cool home prices, ordering the central bank to raise down-payment requirements for second mortgages in cities with excessive cost gains.

“Property sales in August weren’t really desirable,” Luo Yu, a Shanghai-based analyst at advisory firm CEBM Group, wrote in an e-mailed report after the data release, citing the rising home prices amid slower sales. “We continue to be cautious with sales expectations” for the traditional strong season of September and October.

‘Marginal Tightening’

A slower expansion in pre-sale proceeds and mortgage loans indicated a “marginal tightening” in liquidity conditions among developers, Luo wrote. Those indicators may continue to slip on a year-on-year basis amid slower bank lending and economic growth, he added.

The growth in contract deposits and pre-sale receipts fell 6.6 percentage points from July to 38.1 percent last month, while the pace of mortgage borrowing cooled by 5.7 percentage points to 50.3 percent, today’s data show.

Investment in homes, office buildings, malls and other real estate gained 19.3 percent to 5.21 trillion yuan in the first eight months, the statistics bureau said in a statement on its website today. New construction rose 4 percent to 1.28 billion square meters (13.8 billion square feet).

Increasing Supplies

Not all were concerned about the drop in sales.

“A small decline like that doesn’t mean too much,” Dai Fang, a Shanghai-based property analyst at Zheshang Securities Co., said by phone, referring to the decrease in August home sales. “You can rest assured that sales numbers will undoubtedly be higher this month,” he added, citing an expected increase in supplies of new homes.

An index tracking property shares listed in Shanghai rose 3.3 percent at the close of trading, the most since July 11. The benchmark Shanghai Composite Index gained 1.2 percent after today’s data on industrial production and fixed-asset investment exceeded economists’ estimates.

China’s new home prices surged 8.6 percent last month from a year earlier, to 10,442 yuan per square meter, SouFun said last week after a survey of 100 cities.

The government should implement “relatively strict” property controls to prevent a rebound in property prices, a China Securities Journal commentary said today.

Home sales volume rose 24.4 percent in the first eight months from a year earlier to 634 million square meters, the government data showed today. Property sales value including office buildings and retail space climbed 34.4 percent to 4.57 trillion yuan from a year ago, it showed.

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