China's February home sales value extends decline as trade war weighs on the lifetime buying decision for most people

China's February home sales extended their decline, following a weak showing a month earlier, as economic uncertainty from the nation's ongoing trade war with the United States continued to weigh on what could be the biggest purchase of a lifetime for most buyers.
The contracted sales value by China's 100 largest developers fell 11 per cent last month to a combined 446.4 billion yuan (US$66.7 billion), compared with last year, according to data by China Real Estate Information Corporation (CRIC). Compared with January, sales last month slid 23 per cent.
"February should have been a busy season, especially for smaller cities where returnees to their hometowns typically snap up a property to mark the Lunar New Year celebrations, but this didn't materialise this year," said the consultancy's research director Yang Kewei. During the same period in 2018, holiday home sales boomed, forming a higher base for comparison.
The growth in China's real estate sales, crimped by draconian measures since October 2017 to stem speculation, has slowed further in recent months as the effects of the escalating US-China trade war spilled into the economy. Manufacturing activity has slowed in the "world's factory', causing consumption to falter.
As the Chinese legislature prepares to hold its annual gathering next week in Beijing, homebuyers and analysts are watching to see if the government would signal any easing in its price-control measures to kick start a stalling industry. Already, local authorities in Shandong, Guangzhou and Zhuhai have been given the leeway to ease their cooling policies within their jurisdictions.
Still, it may take time for buyers to gain enough confidence to return to the market, considering that a property is typically the biggest purchase of a lifetime for most owners.
"We expect sales in March to contract by more than 10 per cent compares with last year, considering the low sell-through rate, low sentiment and higher base [of comparison] among lower-tier cities," said Eric Zhang and Pu Wang, analysts of China International Capital Corporation (CICC). "If there is more policy easing, the situation could improve, but without it the downtrend would persist."
Sales by the 60 cities monitored by CICC fell 11 per cent in the first two months of 2019, while average prices dropped by 3 per cent, compared with December, the bank said. Average sell-through rate, the amount of homes sold against new listings, fell to 60 per cent in 10 key cities, the slowest pace in nearly four years, CICC said.
The bearish sentiment is shared by some developers. Yu Liang, chairman of China's second-largest property seller China Vanke, said the country's real estate industry faces a prolonged downturn that is unlikely to find a bottom in 2019.
"The basic demographic trend [of China's greying society and low birth rate] and overall economy exert a much bigger impact on our sector, than the industry policy change," Yu said in a speech to his company this week. "The former two shape the industry in 10 to 20 years while the policy affect two to three years."
To survive the downturn, Vanke will sharpen its focus on building real estate, eschewing proposals to diversify into non-property businesses, Yu said. Any venture that doesn't make a profit after three years will be shuttered, he said.
Country Garden, the biggest developer in the country, particularly among China's smaller cities, said it would stream line its head office to transfer more staff to outlying, regional offices where overheads are cheaper.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
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