China home sales slim down during Year of the Pig celebrations

Less plump contracted sales for the mainland’s biggest developers as well

Year of the Pig toy products for sale in observance of the Chinese Lunar New Year. Leeyakorn06/Shutterstock

The traditional lunar new year break saw a lull in new home sales, and outlook will remain bearish thereafter, says leading market observers.

Seventeen major cities in mainland China saw new home sales drop 56 percent year-on-year, the South China Morning Post reported, citing a research note released Tuesday by investment bank China International Capital Corporation.

Similarly, only four out of 14 cities posted an annual growth in sales from 4 to 9 February, while the cities of Yangzhou, Fuzhou, and Zhaoqing recorded declines of 80 percent or more, as per a report by Huatai Securities.

“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,” Raymond Cheng, head of Hong Kong and China property research at CGS-CIMB Securities, was quoted as saying by the Post.

“A year later, the outlook is the opposite – sentiment has gone south.”

The slump is likely to persist into the new year. New home sales by volume will slump by 10 percent, especially in smaller cities where prices have experienced a rally, Cheng forecasted.

Combined contracted sales in the 10 biggest mainland Chinese developers by sales volume posted a year-on-year slump of 15 percent during the holidays, according to the consultancy CRIC.

The declines were not limited to real estate, as revenues in retail and catering posted an increase of 8.5 percent during the seven-day holiday break, the lowest in a decade, data from China’s ministry of commerce showed via the Post.