China home sales decline 56% during Lunar New Year holiday
February 19, 2019 Category China News Round-up, Weekly
New homes sales declined by 56% year-on-year in 17 major Chinese cities, including Shanghai and Nanjing, during the Lunar New Year holiday from February 4 to 9, in a sign that does not bode well for a sector already weighed down by a bearish outlook and concerns about a slowing economy. Investment bank China International Capital Corp (CICC) said Beijing’s easing stance on the overall economy boosted market sentiment in the beginning of 2019, but sales data from sample cities and developers shows “the fundamentals of the property sector have actually exacerbated”.
A survey of 14 cities by Huatai Securities found that only four cities had posted growth in sales year-on-year during the holiday period. On the other hand, Yangzhou in Jiangsu province, Fuzhou in Fujian province, and Zhaoqing in Guangdong province reported declines of 80% or more. Raymond Cheng, head of Hong Kong and China property research at CGS-CIMB Securities, said: “A major reason for the big slump is a high comparison base. In the beginning of 2018, sales were brisk and the common outlook was that the bull run would continue. A year later, the outlook is the opposite – sentiment has gone south.” Cheng once again forecast that for the whole year, China’s new home sales by volume will slump by 10%. Chinese property developers have already reported a decline in home sales for January. According to property consultancy CRIC, the top 10 developers in terms of sales volume reported a 15% year-on-year decline in combined contracted sales. Sales at the top three developers, Country Garden, China Vanke and China Evergrande Group, contracted by 28% or more in January.
The drop in home sales has been accompanied by a decline in spending on cars, travel and other sectors. Retail and catering revenue rose by 8.5% during the seven-day Year of the Pig holiday, according to China’s Ministry of Commerce (MOFCOM), the lowest rate since the government began publishing holiday sales data a decade ago. National tourism revenue growth also slowed to 8.2%, the first instance of single-digit growth since 2008.
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