March home sales grow even as China curbs kick in

A woman walks past residential buildings in Beijing, on July 15, 2016.
A woman walks past residential buildings in Beijing, on July 15, 2016. PHOTO: REUTERS

BEIJING • 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 per cent to 1 trillion yuan (S$202.55 billion) last month from a year earlier, according to Bloomberg calculations based on data released yesterday by the National Bureau of Statistics. The increase compares with a 23 per cent 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 per cent last month to 130 million sq m, below the 24 per cent growth in the first two months of 2017.

"The curbs are showing their effects," said Guotai Junan Securities analyst Liu Feifan in Shenzhen, predicting that sales growth will continue to slow.

Policymakers are seeking to clear a glut of unsold homes in smaller urban centres, 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 who fear being ruled ineligible for future purchases flocking into the market.

Investment in real estate development gained 9.4 per cent in March from a year earlier, up from 8.9 per cent in the first two months, according to Bloomberg calculations.

Strong property investment helped China's fixed-asset investment excluding rural areas expand 9.2 per cent in the first quarter, up from 8.1 per cent growth last year.

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

The increasingly high leverage that Chinese households have taken on for home purchases is not sustainable, said Guotai Junan's Mr Liu. 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.

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A version of this article appeared in the print edition of The Straits Times on April 18, 2017, with the headline 'March home sales grow even as China curbs kick in'. Print Edition | Subscribe