Friday 17 November 2017

New home sales are latest sign of slowdown in China

Chinese new home sales slowed, in the latest sign of a slowdown in the economy there
Chinese new home sales slowed, in the latest sign of a slowdown in the economy there

Michele Yun

Chinese developers target lower growth for new-home sales this year, as prospects for the real estate market remain in doubt even after the government eased monetary policy and lifted curbs on housing purchases.

Property companies are targeting median growth of 12.6pc for contract sales this year, less than 2014's 16pc annual gain, a Bloomberg survey of 28 listed developers showed. The median of sales were 42.2 billion yuan last year (€6.1bn) short of the median target of 44 billion yuan.

Last year's targets reflected "blind optimism," said Du Jinsong, Hong Kong-based analyst with Credit Suisse. Developers face "bigger uncertainty" in achieving this year's targets, he said.

The survey shows that developers are still not confident that a slowdown now in its second year will end. The government last month sought to prop up the flagging market by cutting the down-payment requirement for some second homes. The central bank has also cut interest rates twice and reduced banks' required reserves.

Shenzhen Investment, Beijing Capital Land Ltd. and Powerlong Real Estate Holdings. were the only companies forecasting sales increases of more than 20pc this year, the survey showed.

The reduction in growth targets for new home sales, is the latest indicator of a lag in the Chinese economy, even though top line economic indicators remain strong at present.

China's home prices dropped in more cities in February as an economic slowdown weighed on demand even after the government removed property curbs and reduced borrowing costs. (Bloomberg)

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