China property firms reap July boost, spooked investors seen seeking haven

[HONG KONG] China's big property developers saw sales jump in July, as realtors said some investors sought refuge from the mainland's US$4 trillion stock market rout by pulling their money out of shares and putting it into bricks and mortar.

As the Shanghai and Shenzhen bourse indices slid 14 per cent in July, extending a June valuation slide triggered by economic jitters, monthly sales at 18 firms surveyed by Reuters showed double-digit percentage gains in price and volume compared with a year ago.

The numbers reported by firms like China Vanke will ease concerns that investors might rush to sell property to repay stock margin calls, undermining Beijing efforts since last year to reverse a housing slowdown. Vanke, China's top residential property developer, said its July sales by area grew 33 per cent, while the value increased 79 per cent. "Property sales last month didn't experience the slowdown we anticipated. This shows that China's real demand in housing is very strong, and some investors might have moved their money to real estate from stocks as they didn't want to risk speculating anymore," said David Hui, sales director at realtor Centaline Property.

Boosted by new sales launches, the positive trend in what is typically a slack month - hot July and August weather traditionally discourages buyers - will be welcomed by both the government and industry players. As well as interest rate cuts, Beijing has rolled out relaxed tax rules and downpayment requirements on second homes to counter a housing slowdown seen as a major risk to the world's second-largest economy. "July sales were very robust. The impact from stock market was more on sentiment rather than actual sales," an official of state-backed developer China Resources Land said, referring to its new launches in Shenzhen and Beijing.

As developers push on new launches towards year-end to meet full-year sales targets, optimism is growing for September and October - "gold" and "silver" months respectively, according to Chinese tradition.

China's top economic planner, the National Development and Reform Commission, said earlier on Monday that the property market was likely to continue to improve in the second half of this year, a good sign for an economy struggling to bolster the pace of growth.

Home sales area jumped 57.5 per cent in July from a year early, according to researcher China Real Estate Index System (CREIS) that tracks 35 major cities. Official July data will be published by the National Bureau of Statistics on Wednesday.

In a separate survey that tracks 100 cities, CREIS said home prices rose 0.54 per cent in July compared to June, posting the third consecutive month of increase.

REUTERS