China March Home Sales Buoyant Even as Curbs Start to Bite

Updated on
  • Sales up 18% by value, but only 11% by volume in March
  • At least 64 cities have announced property buying curbs

The West Pearl Tower stands among residential and commercial buildings in Chengdu.

Photographer: Qilai Shen/Bloomberg

The value of China’s home sales remained buoyant in March, though volume figures indicated that curbs in a number of cities may be slowing the recent buying frenzy.

New home sales by value rose 18 percent to 1 trillion yuan ($145 billion) last month from a year earlier, according to Bloomberg calculations based on data released Monday by the National Bureau of Statistics. The increase compares with a 23 percent surge in the first two months of the year.

But the value of sales partly reflected surging home prices. By volume, home sales grew only 11 percent in March to 130 million square meters, according to Bloomberg calculations, below the 24 percent growth in the first two months of 2017.

“The curbs are showing their effects,” said Liu Feifan, an analyst at Guotai Junan Securities Co. in Shenzhen, who predicted that sales growth will continue to slow.

Policy makers are seeking to clear a glut of unsold homes in smaller urban centers, while pledging to enforce strict curbs in most first- and second-tier cities to prevent a housing bubble. In a month when at least 64 cities announced new or stricter property-buying restrictions, some of the growth in home sales reflected buyers flocking into the market fearing they’d be ruled ineligible for future purchases.

Property Investment

Investment in real estate development gained 9.4 percent in March from a year earlier, up from 8.9 percent in the first two months, according to Bloomberg calculations. Strong property investment helped China’s fixed-asset investment excluding rural areas expand 9.2 percent in the first quarter, accelerating from 8.1 percent growth last year.

Some of the growth represented a “delayed effect” from an earlier property boom, and the rate is likely to decelerate soon, Zhou Hao, a Singapore-based economist at Commerzbank AG., wrote in a note after the data release.

Liu at Guotai Junan said the increasingly high leverage that Chinese households have taken on for home purchase is “not sustainable.” New medium and long-term loans to households, made up mostly of mortgages, picked up again last month to 450.3 billion yuan, according to official data last Friday.

— With assistance by Emma Dong

(Updates with volume figures, analyst comment in fourth paragraph.)
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