Chinese property sales volume rebounds by 12%

Monthly volumes of flats also slowed down by 30%.

UOB says China’s residential market is showing signs of slowing down.

Here’s more from UOB KayHian:

We went on a two-week China property tour and visited various residential and commercial developments across Beijing, Shanghai, Chengdu, Tianjin and Qingdao. We visited projects by Keppel Land, CapitaLand, GuocoLand, Shimao Properties and Treasury China Trust.

Our ground feel is that China’s residential market is showing signs of slowing down with weakness more pronounced in first-tier cities like Beijing and Shanghai than in second-tier cities like Chengdu, Tianjin and Qingdao. While developers’ marketing agents and other industry experts sound relatively optimistic in their outlook for second-tier cities, the sentiment in first-tier cities is relatively muted.

Widespread price cuts likely with increase in funding costs. Although none of the projects we visited were seen offering discounts, marketing agents we spoke to confirmed that 2-5% discounts are being offered in some of the nearby projects. Our China research team has highlighted that widespread price cuts are likely with increases in funding costs and difficulties in getting onshore financing.

More cities saw mom price declines in May. According to data by the National Bureau of Statistics, 50 of the surveyed 70 major cities saw mom price increases in May, lower than the 56 cities in April. Nine saw price declines and 27 recorded smaller mom gains. Although prices were generally on the rise in May, the mom price increases in the 50 cities were below 1%. As more developers offer discounts, we expect overall ASP to gradually decline along with lower sales volume in July.

Volumes to slow down; policy effects more pronounced in mass market and mid-tier segments. After three consecutive weeks of decline, the latest property sales volume in the 18 cities monitored by our China research team rebounded by 12% wow last week. However, sales in the past week were still some 5% below the May average. Our team expects property sales to slow down in the coming weeks due to more buyers adopting a wait-and-see stance approach.

Our visits indicate that the monthly volumes in show flats have slowed down by over 30% since the beginning of the year. Marketing agents we spoke to agreed that buyers are becoming more cautious and constrained by recent home purchase restrictions. The effects of the measures were more pronounced in the mass market to mid-tier segments where volumes have slowed down considerably after the latest set of policy measures. The policy impact on the high-end segment is less visible as most buyers make cash purchases. This contradicts the popular belief that the high-end segment has been impacted more than the mass market.

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